Yageo Corp (國巨) yesterday reported that net profit last quarter plunged to NT$893 million (US$29.39 million) from NT$2.04 billion in the previous quarter, due to unrealized foreign-exchange losses of NT$920 million and one-time merger expenses of NT$330 million.
Non-operating expenses reduced profit by NT$3 per share, causing earnings per share (EPS) to fall from NT$4.81 to NT$3.1, the world’s third-largest supplier of multilayer ceramic capacitors (MLCCs) said.
However, gross margin improved to 33.5 percent, up from 31 percent in the prior quarter, it said.
Net profit last year plunged 79.46 percent to NT$6.95 billion, compared with NT$33.84 billion in 2018, with EPS falling from NT$80.3 to NT$16.35.
Yageo’s board of directors proposed distributing a cash dividend of NT$15 per share, representing a 92 percent payout ratio.
The company, based in New Taipei City’s Sindian District (新店), said that its inventory has declined to the lowest level in about 10 years as labor shortages linked to the COVID-19 outbreak in China curbed production expansion, adding to constraints since last quarter.
“The company’s inventories of finished goods for its two major products, MLCCs and chip resistors, are rapidly declining to below 30 days,” Yageo chairman Pierre Chen (陳泰銘) told reporters on the sidelines of an extraordinary shareholders’ meeting yesterday.
“Market demand has greatly exceeded the company’s production,” Chen said.
The company’s book-to-bill ratio is predicted to surpass 2, although the outbreak has cut overall demand by about 20 percent, he said.
Yageo resumed factory operations in China on Feb. 10 as planned, but it is grappling with a staff shortage amid snail-paced recruitment and fewer employees returning to work due to the outbreak, he said.
The company originally aimed to boost factory utilization to 60 to 65 percent by the end of next month.
As transportation restrictions remain in place in China, it now aims to lift factory usage to 50 percent from between 35 and 38 percent.
Yageo’s Chinese operations account for 70 percent of its total factory capacity, while its Taiwanese operations make up the remainder.
Chen declined to comment on whether the tight supply has prompted the company to hike prices.
He said that the company would pass the rising costs on to customers, as labor and transportation costs spiked due to the COVID-19 outbreak.
Shareholders approved the offering of 80 million new common shares in the form of depositary receipts to facilitate the acquisition of Kemet Corp, which focuses on making MLCCs for automotive devices.
Yageo said that the transaction is expected to close in the third quarter of this year as planned, subject to the approval of competition watchdogs in Taiwan, China and Mexico.
The company has won approvals from the US, Germany and Austria, it said.
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