Notebook computer maker Micro-Star International Co (MSI, 微星科技) yesterday said the Russia-Ukraine war is hurting consumer spending in Europe, but that it still aims to grow revenue by double-digit percentage points this year amid strong demand from gamers and enterprises in the post-COVID-19 era.
MSI, which primarily makes gaming notebook computers and motherboards, last year saw its revenue soar 37.8 percent annually to a record NT$201.81 billion (US$7.07 billion), as the COVID-19 pandemic spurred demand for computers and booming cryptomining activity drove sales of its graphics cards.
The growth looks sustainable this quarter, but the impact of the Russia-Ukraine war became evident this month, dampening demand for non-essential goods, MSI said.
Photo courtesy of Micro-Star International Co
“We are seeing consumers in European countries, including Germany, tightening their purse strings after the Russia-Ukraine war erupted. We are seeing buying sentiment dip significantly by double-digit percentage points in March,” MSI chairman Hsiang Hsu (徐祥) told investors during a virtual conference yesterday. “We believe the second quarter will be the trough of this year. It is also because the second quarter is usually a slow season.”
For the full year, the geopolitical tensions would affect the New Taipei City-based company’s revenue and profits to some extent this year, Hsu said.
Russia accounted for about 5 percent of MSI’s total revenue last year, he said.
MSI expects revenue to regain momentum in the second half of this year, benefiting from robust demand for gaming and commercial notebook computers, as well as higher motherboard demand following the launches of new graphics cards and CPUs by Intel Corp, Nvidia Inc and Advanced Micro Devices Inc, Hsu said.
Addressing investors’ concern about potential losses from the ruble’s depreciation, Hsu said MSI did not expect any major impact from the Russian currency’s fall, as most of the company’s accounts receivable from Russian clients have built hedge positions against foreign exchange volatility.
There are some bright spots, though, MSI president Huang Chin-ching (黃金請) said.
“The supply of key components along the supply channel has been improving, compared with a supply crunch last year,” Huang said. “Supply constraints are almost resolved, with only certain key components, such as power chips, remaining tight currently.”
Channel inventories also rebounded to about two to four weeks this month, from one to two weeks last year, Huang said.
However, there is still some catching-up to do to reach the healthy level of six to eight weeks, he added.
MSI’s board of directors on Monday approved a plan to distribute a cash dividend of NT$10.5 per common share, an all-time high. That represented a payout ratio of about 52.42 percent based on the company’s earnings of NT$20.03 per share last year, lower than 65 percent in the previous year.
MSI said it is allocating some capital to fund new capacity expansion at its factories in Taiwan and China in response to rapidly growing demand.
The company has also invested in a new production line in Taiwan to cope with US-China trade disputes, it said.
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