The COVID-19 outbreak in China and seasonal weakness might cut revenue by 30 percent this quarter as containment measures, including transportation restrictions, imposed in China would reduce raw material supply, Taipei-based TPK Holding Co (宸鴻) yesterday said.
With material inventories running lower than normal levels, the touch module and sensor supplier “is working closely with partners in the supply chain to satisfy customers’ demand,” TPK chief executive Leo Hsieh (謝立群) told investors during a teleconference.
The company said it expects production output to be reduced by 20 to 30 percent this month and might fall about 20 percent next month, before production returns to normal in April.
TPK holds a “cautiously optimistic view” for the year, and hopes delayed demand to recover after the outbreak ends, Hsieh said.
TPK, which operates plants in Xiamen, China, does not expect to be as much affected by the COVID-19 outbreak as companies with operations in industrial zones in other provinces.
“As of Monday this week, the number of employees returning to work was sufficient to operate production lines to meet customers’ demand,” Hsieh said.
The company has been able to win more orders than its rivals, thanks to its quick resumption of work and better operational efficiency, he said.
The company said it aims to break even in operating profit this quarter.
TPK reported a net loss of NT$98 million (US$3.24 million) last quarter, due to an impairment loss of NT$817 million for retiring some outdated manufacturing equipment, compared with a net profit of NT$192 million for the same quarter last year.
Gross margin fell from 3.7 percent a year ago to 1.8 percent, but excluding the impairment loss, gross margin would have been 4 percent, TPK said.
TPK’s net profit for last year was NT$209 million, a 6.7 percent drop from the NT$224 million it made in 2018. Earnings per share fell from NT$0.55 to NT$0.51, while revenue rose 20.4 percent to NT$136.61 billion, from NT$113.48 billion in 2018.
New touch module orders from tablet suppliers helped offset the loss of orders from Apple Inc, who scrapped the force-touch feature for its new iPhone X series last year, TPK said.
Cellphone-related orders fell to 45 percent of total revenue last year, down from 53 percent in 2018, it said.
TPK plans to spend NT$4 billion to expand capacity for its new silver-nanowire (SNW) touch technology used in large-size digital whiteboards, public displays and LCD assembling production lines, it said.
One of its clients is scheduled to roll out a new smartphone featuring its SNW products in the third quarter this year, it said.
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