Yageo Corp (國巨) yesterday saw its stock price rally 5.69 percent despite the world’s No. 3 maker of passive components expecting revenue to sequentially drop single-digit percentage points this quarter, as customers face a longer inventory digestion cycle likely to persist through the second quarter of next year.
Weakening demand could push factory utilization down to about 85 percent this quarter for its premium product lines, compared with 90 percent last quarter, Yageo said.
Factory usage for commodity-type product lines is to be much lower this quarter, dipping to between 45 percent and 55 percent from between 50 percent and 60 percent last quarter, the New Taipei City-based company said.
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Yageo expects weak demand for commodity products used in consumer electronics such as computers and smartphones to have a “limited” impact, as those products make up a smaller revenue share at about 25 percent, Yageo president David Wang (王淡如) told an online investor’s conference on Thursday.
Although the industry is entering a prolonged inventory correction cycle, Yageo expects its book-to-bill ratio to be close to 1 for premium products used in industrial devices and automobiles — particularly autonomous vehicles — said Claudio Lollini, Yageo’s executive vice president of global sales and marketing, indicating that demand for the company’s components would be stable in the final quarter of this year.
Pricing is also showing signs of stabilizing this quarter and in the first quarter of next year, Lollini said.
The pricing pressure mainly comes from commodity products extending from last quarter, and demand from China is relatively weaker than other regions, he said.
Sales to China made up 19 percent of Yageo’s overall revenue last quarter, while the US is the company’s biggest revenue source with a contribution of 34 percent, Yageo data showed.
Yageo’s revenue expanded 4.8 percent year-on-year to NT$30.8 billion (US$965.37 million), representing a quarterly decline of 1.7 percent.
Gross margin is expected to fall 2 percentage points this quarter from 38.5 percent last quarter, Yageo said.
The stock price of Yageo increased 5.69 percent to NT$445.5 yesterday, versus the TAIEX’s gain of 3.73 percent.
Net profits last quarter contracted 6.3 percent to NT$6.4 billion, compared with NT$6.83 billion a year earlier, the second-highest level in the company’s history. On a quarterly basis, net profits expanded 7.9 percent from NT$5.93 billion.
Earnings per share (EPS) fell to NT$12.1 last quarter, from NT$13.88 in the third quarter last year. That was an increase from NT$11.05 in the second quarter.
During the first three quarters of this year, Yageo’s net profit rose 2.2 percent to NT$18.57 billion, compared with NT$18.17 billion during the same period last year. EPS improved with a 34.74 percent increase from NT$36.83.
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