Electronic components maker Lite-On Technology Corp (光寶科技) yesterday reported that first-quarter net profit rose 7.3 percent from a year earlier to NT$1.57 billion (US$52.42 million), despite the impact from the COVID-19 pandemic.
While revenue dropped 20.88 percent on an annual basis to NT$32.58 billion due mainly to a production halt in China, its gross margin climbed to a seven-year high of 14.5 percent, thanks to an improved product mix and operating efficiency, the company said.
“The gross margin would be 0.2 percentage points higher if we do not take into account losses incurred by subsidiary Silitech Technology Corp (閎暉),” Lite-On vice chairman and chief operating officer Warren Chen (陳廣中) told investors at an earnings conference in Taipei, adding that the company’s performance was affected by continuous losses from its solid-state drive (SSD) business.
Sale of the SSD unit to Japan’s Kioxia Holdings Corp was delayed by the pandemic, but the deal is expected to close by the end of this quarter, Chen said.
Giving a rosy outlook for business this quarter, Chen said the company is operating at full capacity across its plants in China to satisfy customers’ mass orders.
“Clients are pressing us everyday [because] the market is undersupplied, with sales channels empty,” Chen said.
The company forecast an 18 percent sequential increase in sales this quarter, given more working days than last quarter.
However, order visibility for the second half of the year remains low, as the pandemic continues to affect European and US markets.
“We will have to see how products perform this quarter at end markets,” Chen said.
Facing investors’ concerns over rising prices of passive components, Chen said Lite-On has found a local supplier offering more “reasonable” prices, adding that the company has enough inventory to see production through this quarter.
Lite-On is also aiming to increase its production outside China from 15 percent to more than 20 percent within the next two years.
The company has moved part of its production of motherboards and keyboards to a new manufacturing facility in Vietnam, which is expected to contribute less than 10 percent of total shipments this year, Chen said.
Lite-On last year relocated production of data center components and chargers to a plant in Kaohsiung amid the trade tensions between the US and China.
The company also has production sites in Thailand, Mexico and India.
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