Lite-On Technology Corp (光寶科技) yesterday provided a hazy outlook for the first half of this year, citing COVID-19 concerns, as it seeks to resume production in China.
“At the moment, we have quite low visibility in orders stretching to the next quarter, as the COVID-19 outbreak has spoiled shipment schedules,” Lite-On chief operating officer Warren Chen (陳廣中) told an investors’ conference in Taipei.
Commenting on the company’s efforts in resuming production in China, Chen said Lite-On should be able to see about 85 to 90 percent of production lines resuming work by the end of next month.
“We have provided incentives, such as indemnities and bonuses, for workers returning to work,” he said.
First-quarter sales are expected to decline by 20 to 30 percent year-on-year as the electronics industry faces a slump in production, Chen said, citing delayed product launches by several clients.
“We are not alone in this, we have to depend on our upstream suppliers to come up with materials, while our downstream clients are facing a market demand dampened by China’s current economic stall,” Chen said.
Lite-On’s sales would be further weighed down by clients having stocked up inventory prior to the Lunar New Year holiday, he added.
Although the outbreak continues to threaten production, Chen said he has no intentions of accelerating the company’s relocation plans from China.
“This is the first time we’ve encountered such a situation in over 30 years since we’ve started investing in China... I find it hard to justify any relocation decisions made on the sole basis of a virus outbreak,” Chen said.
The electronics industry would recover in the second half of the year as the current crisis blows over, he said.
The company last year relocated a small part of its production to Taiwan and Vietnam, with shipments due to start this year, amid a trade dispute between the US and China.
Lite-On’s net profit last quarter declined 4.52 percent annually to NT$2.41 billion (US$79.32 million), or earnings per share of NT$1.03.
While revenue last quarter tumbled 13 percent due to lackluster performance by the company’s storage segment, gross margin improved by 2.8 percentage points to 16.2 percent thanks to a better product mix and higher operational efficiency, the company said.
Overall revenue last year fell 14.08 percent to NT$177.95 billion, while gross margin increased from 13.1 percent to 15.4 percent.
As a result, net profit surged 17.82 percent year-on-year to NT$9.38 billion, which translated into earnings per share of NT$4.03, the highest in three years.
The company’s board of directors yesterday approved a plan to distribute a cash dividend of NT$3.2 per share, representing a payout ratio of 79 percent.
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