Casetek Holding Ltd (鎧勝), Pegatron Corp’s (和碩) metal casings subsidiary, expects profitability to improve in the second half of the year, buoyed by new product releases.
The company has for the first time secured smartphone casing orders for Apple Inc’s iPhone and has mastered the steep learning curve of being a supplier for the US technology giant, Casetek chief executive officer Gary Chuang (莊育志) said on the sidelines of a shareholders’ meeting in Taipei.
While the company has built expertise in tablets and laptops, it has over the past two years been accruing experience in smartphones with brands such as Huawei Technologies Co (華為), Chuang said.
While the company started taking laptop casing orders in 2012, it took the firm about three years to stabilize production yield for laptop computers, he said.
It should take significantly less time to adapt to smartphones, depending on customer specifications, he added.
Margins and sales are expected to make sequential gains in the final quarter of this year to exceed last year’s performance, Chuang said.
Smartphones would gradually contribute larger sales for the company, Casetek chairman Jason Cheng (程建中) said.
However, margins are likely to remain depressed next quarter, as the company would still bear the burden of capacity expansions, which weighed on profitability last year, Cheng added.
The company is expected to reach 40 percent of its NT$18 billion (US$596.3 million) capital expenditure target at the end of this month, Cheng said.
HThe company has adopted a strategy of expanding its capacity ahead of customer orders in a bid to cater to customers’ shorter product development cycles, he said.
The company last quarter reported a net loss of NT$496 million, compared with a profit of NT$342 million a year earlier. Net losses per share were NT$1.28.
Sales during the January-to-March period fell 33.9 percent quarter-on-quarter, but gained 3.2 percent annually to NT$6.54 billion.
Gross margin was 1.5 percent, down by 9.6 percentage points from the previous quarter and down by 14.5 percentage points from a year earlier.
Operating margin fell to minus-10.6 percent, down from 3.37 percent in the previous quarter and 5.18 percent a year earlier.
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