Leading power and thermal solutions provider Delta Electronics Co (台達電) yesterday offered a cautiously optimistic outlook for the second half of the year as it faces lingering market uncertainties.
Chairman Yancey Hai (海英俊) said that revenue should hit its peak this quarter in line with its historical pattern, but its bottom line would decrease compared with last quarter’s NT$9.5 billion (US$304.66 million), or earnings per share of NT$3.67, when it acquired an additional 42.85 percent stake in Delta Electronics (Thailand) PCL (泰達電) in April.
The company now holds a 63.78 percent stake in the Thai subsidiary.
“There are still too many potential disruptive factors, such as the US-China trade war and the rising conflict between Japan and [South] Korea,” Hai said, adding that the company has low order visibility for the fourth quarter.
“Our industrial automation production line has suffered since the second half of last year when the trade war broke out... Chinese investors remain cautious, but things are looking a bit better,” Hai said.
However, this business should improve in the long run as the Chinese government has set its agenda to deploy industrial automation on a massive scale by 2025, he said.
Delta’s second-quarter revenue came in at NT$73.4 billion, up 27 percent year-on-year, with the power electronics segment contributing 49 percent, the infrastructure segment another 37 percent and the automation segment the remaining 14 percent.
The automation segment saw operating profit decline 36.45 percent to NT$919 million last quarter from NT$1.45 billion a year earlier, despite a 5 percent increase in revenue to NT$9.91 billion from NT$9.39 billion.
On the bright side, Hai expects better performance this quarter from other sectors, such as fans and thermal products, data centers, power systems and passive components.
In addition, Delta is working on a project with Taiwan Power Co (台電) to develop energy storage systems as Taiwan’s wind power industry continues to grow, Hai said, adding that the company is developing micro-grids used in renewable energy transmission systems to better regulate the flow.
“5G is the next big thing everyone is talking about ... and it is good news for us, as 5G base stations run on 30 to 40 percent more energy than 4G [base stations],” he said.
Hai remained cautious about Delta’s electric vehicle segment, as “the current market for electric vehicles does not quite meet our expectations,” he said.
Several underlining factors, such as high production costs and the lack of widespread charging stations, need to be addressed, he said.
“An average electric vehicle costs about US$40,000, which is not cheap, and companies cannot afford to lower prices as most of them have not reached economies of scale,” Hai said.
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