Largan Precision Co’s (大立光) gross margin improved in the second quarter of this year thanks to foreign exchange gains and production cost-intensive voice coil motors (VCMs) accounting for a lower share of sales, the smartphone camera lens maker reported yesterday.
Gross margin rose to 55.8 percent, up 2.44 percentage points from 53.36 percent in the first quarter and ending four consecutive quarters of declines, said the leading maker of optical lens modules, which also produces VCMs and sleep monitoring systems.
In the second quarter of last year, gross margin was 60.29 percent, company data showed.
Photo: David Chang, EPA-EFE
Largan did not provide a guidance for gross margin in the second half of the year, as the measure of profitability is subject to multiple factors, including the scale of production, product yield rate, product mix, capacity utilization rate and foreign exchange rate, Largan chief executive officer Adam Lin (林恩平) told an online investors’ conference.
The Taichung-based firm’s net profit was NT$4.95 billion (US$165.6 million) last quarter, down 10.29 percent from a quarter earlier. On a year-on-year basis, profit was up 67.12 percent.
Nonoperating gains contributed NT$2.17 billion, including foreign exchange gains of NT$1.79 billion, Largan said.
As a result, earnings per share were NT$37.06 last quarter, compared with NT$41.3 in the previous quarter and NT$22.7 a year earlier, the company said.
Revenue declined to NT$9.68 billion in the second quarter, down 4.51 percent quarterly and 4.33 percent annually, Largan said, attributing the trend to the COVID-19 lockdowns in China, supply chain snags and consumer market weakness.
Last quarter’s revenue was the lowest since the first quarter of 2018, when sales were NT$8.88 billion, company data showed.
As customers are preparing to launch new smartphones in the fall, the company’s revenue for this month would be higher than last month’s, Lin said, adding that the trend would continue next month.
Largan faces low competition in the high-end mobile phone lens market, and it is to ship 7P and 8P lens modules in the second half of this year, Lin said.
A 7P lens contains seven layers and is more advanced than lenses with fewer layers.
However, demand for such high-end lenses remains weak, as customers are generally less upbeat about the end market amid slowing phone sales worldwide, he said.
Higher inventories could pose another issue for supply chains, he added.
As for the construction of new manufacturing facilities in Taichung, Lin said the new plant is facing a labor shortage.
Therefore it would not start production in the middle of next year as scheduled, he said, adding that the plant would likely provide revenue contribution as early as the fourth quarter of next year.
In the first half of this year, Largan’s revenue totaled NT$19.81 billion, down 10 percent from NT$21.93 billion a year earlier.
It reported net profit of NT$10.46 billion, up 26 percent year-on-year, or earnings per share of NT$78.36, and gross margin of 54.55 percent.
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