Automotive metal sheet and bumper manufacturer Tong Yang Industry Co’s (東陽) pretax profit last year fell 18.87 percent to NT$2.44 billion (US$79.1 million) from NT$3.01 billion.
Earnings per share was NT$4.05, it said on Tuesday.
The declining income was due to lower revenue in the aftermarket (AM) business and original equipment manufacturing (OEM) segments, as well as weak consumption in the emerging markets and rising raw material cost, Tong Yang said.
Due to a high comparison base and destocking activity at Chinese auto brands, OEM sales decreased 11.1 percent annually to NT$8.24 billion last year, while AM sales fell 2.7 percent to NT$14.77 billion, it said.
Total revenue dropped 5.92 percent to NT$23 billion, compared with NT$24.45 billion for 2017, while the firm set a goal of revenue growth of up to 5 percent, it said.
Yuanta Securities Investment Consulting Co (元大投顧) said Tong Yang’s revenue for this quarter is likely to decline year-on-year as the industry is entering a slow season.
“For 2019, we expect flat revenue and earnings growth for the aftermarket business, with OEM business to improve in the second half of the year thanks to the mass production of new models by the FAW-Volkswagen Automotive Co Ltd (一汽大眾),” Yuanta analyst Kenny Chen (陳景文) said in a note on Tuesday.
Tong Yang supplies parts to FAW-Volkswagen as well as parts to other global and Chinese clients.
China-based Cayman Engley Industrial Co Ltd (開曼英利), which also counts FAW-Volkswagen as its largest customer, reported total revenue for last year expanded 15.78 percent to NT$21.74 billion, driven by steady shipments of high-margin, lightweight structural parts used in its major customers’ passenger cars and electric vehicles in China.
A total of 28.1 million automobiles — including commercial vehicles — were sold last year in China, down 2.8 percent from 2017, the first annual decline in more than two decades, the China Association of Automobile Manufacturers reported earlier this month.
However, the sales of new-energy vehicles, such as those using electricity, hybrid and fuel-cell technologies, surged by 62 percent from a year earlier to 1.26 million units, the group reported.
Ninety percent of Engley’s revenue comes from major customers, including Beijing Benz Automotive Co (北京奔馳) and Volvo Cars Corp.
“Owing to their rising market share and increased willingness to adopt lightweight materials, we believe Engley’s revenue growth could continue to exceed volume growth of Chinese local brands and the overall market. We expect 2019 and 2020 revenue growth of 10 percent and 13 percent respectively,” Chen said.
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