Delta Electronics Inc (台達電), the nation’s leading power and thermal solutions provider, yesterday gave a conservative outlook on its earnings this year due to rising labor and material costs, as well as component shortages at its main business unit.
Power electronics, the company’s biggest business, which contributed more than 50 percent of its total sales last year, would likely see limited expansion due to slowing growth in desktop and notebook computers and servers, Delta chairman Yancey Hai (海英俊) told an investors’ conference in Taipei.
For information and communication technology applications, power electronics have become increasingly commoditized, leaving little room for margin growth as customers look for bargains and can easily switch to another supplier, Hai said.
The company has turned away a number of unprofitable orders as competitors continue to cut their prices, he added.
Price competition has cooled since the second half of last year, as the firm’s rivals began to suffer from component shortages, Hai said.
Delta plans to diversify and tap the power needs of medical and industrial applications, unmanned retail stores, home appliances and power tools, he said.
Contribution from power electronics fell to 53 percent last year, compared with 55 percent in 2016, company data showed.
The company’s industrial and building automation businesses are expected to see the most significant growth, helped by rising wages and labor shortages across the globe, as well as a continued push toward “smart” manufacturing.
A number of acquisitions has led to modest growth in automation sales, Hai said, adding that the investments have helped the company transition from a systems integrator sourcing other companies’ products to a solutions provider selling its own hardware.
The company’s investments into automotive applications and electric vehicles have also made headway into the sectors’ supply chain, he said.
In particular, following nearly a decade of development, the company is preparing to ship its first electric motor to European and US automakers, he said.
Whereas the company had a tough time breaking into the supply chain of fossil fuel-powered cars, it has rapidly gained recognition as a tier-one electric vehicle supplier, he added.
The company has approved a cash dividend of NT$5 per common share, representing a payout ratio of 70.6 percent based on last year’s earnings per share of NT$7.08.
Delta also announced plans to expand its power electronics production capacity in Taoyuan and raise the output at its robotics and automation center in Taichung.
The firm reported that net income last year dipped 2 percent year-on-year to NT$1.84 billion (US$62.8 million), with revenue rising 4 percent to NT$22.36 billion.
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