Electronics manufacturer Pegatron Corp (和碩), a major supplier of Apple Inc’s iPhone 11 series, yesterday reported a 73.8 percent year-on-year surge in net profit to NT$19.32 billion (US$637.5 million) for last year.
While attributing the growth to an increase in factory utilization rate, as well as operational efficiency, the company said non-operating income, which nearly tripled to NT$8.56 billion, also contributed to its bottom line.
Earnings per share rose to NT$7.4 last year from NT$4.25 in 2018, it said.
Pegatron’s board of directors yesterday proposed to distribute a cash dividend of NT$4.5 per share, implying a payout ratio of 60.81 percent.
Addressing potential risks from the COVID-19 pandemic, Pegatron chief executive officer Liao Syh-jang (廖賜政) told investors: “At the moment, we are a little bit worried about end market demand ... but we are cooperating with clients and abiding by government regulations.”
Liao said that he expected to see a quick recovery for the US market and forecast that the company would see a sequential increase in sales next quarter.
“[Overall] production next quarter should meet our clients’ expectations without problem... Our Shanghai, Kunshan and Suzhou plants are even benefiting from order transfers,” he added.
Market demand for products from Pegatron’s three main business segments — computing, consumer electronics and communication devices — remains healthy, Liao said.
The company is also witnessing growing demand for its smart wearable devices as consumers increasingly stay home amid the unfurling pandemic, he said.
Asked about a potential delay in the launch of Apple’s 5G iPhone, which is expected to come out in the second half of the year, Liao said Pegatron would ensure that it is operating smoothly, but the timing of shipments would depend on how the pandemic plays out.
He said he remained confident that upcoming 5G product launches would benefit the company, as they would have higher average selling prices than 4G products.
Pegatron is on track to expand its overseas capacity and is looking to begin shipments from its Vietnam plant in the first half of next year, Liao said, hinting that the company would relocate the production of iPhones to the Southeast Asian country.
“We are moving to Vietnam on a client’s demand... The electronics industry is quite developed there and it is close to China for us to secure production materials [from Chinese suppliers],” Liao said.
Other popular manufacturing locations such as India, where industry peers Hon Hai Precision Industry Co (鴻海) and Wistron Corp (緯創) also make iPhones, are also on Pegatron’s short list, Liao said, adding that any eventual relocation plans would depend on its client’s wishes, as well as incentives from the local government.
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