Tongtai Machine and Tool Co Ltd (東台精機), which mainly makes machining centers and lathes, yesterday said that orders for this quarter are expected to decrease 10 to 15 percent quarter-on-quarter as clients in China remain conservative, but sales from Southeast Asia could make up the shortfall.
“Our machine tools sales to the automotive, printed circuit board and lathe industries in China declined in the first half of the year, and we expect the situation to continue in the second half of the year due to the lingering US-China trade dispute,” company spokesperson Lulu Yen (嚴璐) told an investors’ meeting in Taipei.
Sales from China dropped 19.85 percent in the first half and accounted for 40 percent of total sales, compared with 51 percent a year earlier, Yen said, adding that the company expects the figure to be between 35 and 40 percent by the end of this year.
“Our total orders for the second half have so far dropped 30 percent annually to between NT$4.8 billion and NT$5 billion [US$152.9 million and US$159.3 million], with orders from China dropping from NT$2 billion a year earlier to between NT$1.2 billion and NT$1.3 billion,” she said.
Sales in other Asian countries are expected to account for more than 20 percent of total sales this year as the company aims to diversify its markets to avoid trade risks, she said.
There is more demand for machinery tools in Indonesia and Vietnam, because of increasing output of scooters, bicycles and buses in those nations, Yen said.
Tongtai has no plan to build new plants in Southeast Asia, but is to develop more channels to boost sales, she said.
The company also plans to expand its high-margin printed circuit board, total solution and aftermarket businesses in the second half to improve profitability, Yen said.
As for companies that are returning to Taiwan, Tongtai expects sales to increase next year as they prepare to begin production, she said.
Due to lower profits from its business in China and a drop in non-operating income, the company’s net income fell 40.04 percent year-on-year to NT$122.31 million in the first half of the year, with earnings per share dropping from NT$0.8 to NT$0.48.
Gross margin edged down 0.23 percentage points to 23.61 percent, but revenue rose 2.2 percent to NT$5.56 billion.
The firm attributed the revenue growth to higher demand from the automotive and aerospace sectors.
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