Largan Precision Co’s (大立光) gross margin improved in the fourth quarter of last year thanks to an expanded business scale and an improved product portfolio, the smartphone camera lens maker said yesterday.
Gross margin rose to 55.85 percent, up 2.15 percentage points from 53.7 percent in the third quarter of last year, marking the highest quarterly gross margin of the year, said the leading maker of optical lens modules, which also produces voice coil motors and sleep monitoring systems.
In the fourth quarter of 2021, gross margin was 55.85 percent, company data showed.
Photo: CNA
Despite the improvement in gross margin, the Taichung-based firm’s net profit last quarter fell to the lowest in six quarters due to higher foreign exchange losses.
Net profit was NT$4.02 billion (US$132 million) last quarter, down 50.65 percent from a quarter earlier. On a year-on-year basis, profit was down 21.77 percent.
The company booked foreign exchange losses of NT$2.42 billion last quarter, Largan said.
As a result, earnings per share were NT$30.1, compared with NT$61.01 in the previous quarter and NT$38.37 a year earlier, the company said.
Revenue last quarter rose to NT$14.39 billion, up 6.77 percent quarterly and 10.25 percent annually, Largan said.
Thanks mainly to Apple Inc’s launch of the iPhone 14 series, revenue last quarter was the highest since the second quarter of 2020, when it booked NT$12.69 billion in sales, company data showed. Largan is one of Apple’s largest suppliers.
Lenses with a resolution of 20 megapixels or more — a higher-margin product and one of Largan’s specialties — accounted for 10 to 20 percent of the company’s sales last month, and those of 10 to 20 megapixels made up for 60 to 70 percent of sales, while 8 to 10 megapixel lenses comprised about 10 percent, and other products such as voice coil motors constituted 20 to 30 percent of sales, according to the company.
For last year as a whole, Largan’s net profit increased 21.14 percent to NT$22.62 billion from NT$18.67 billion in 2021, or earnings per share rising to NT$169.47 from NT$139.28, while revenue expanded 1.52 percent to NT$47.68 billion, but gross margin dropped 5.24 percentage points to 54.7 percent, it said.
As the world economy does not fare well and demand in the handset market is worsening, the company’s revenue for this month would be lower than last month’s, and next month’s revenue would also be lower than this month’s, Largan chief executive officer Adam Lin (林恩平) told an online investors’ conference.
Regarding inventory adjustments in the handset supply chain, it seems that the situation has not improved much from three months ago, Lin said, adding that inventories are especially high among Chinese handset vendors.
Vendors are still planning specification upgrades for high-end smartphones, but most phone models would continue to use existing specifications, while some upgrades would be delayed, he said, calling it a development that is not good news for Largan’s high-end product portfolio.
The company has begun production of 8P lens modules, but the volume remains low, Lin said.
An 8P lens contains eight layers and is more advanced than lenses with fewer layers.
As for the company’s new manufacturing facilities in Taichung, Lin said Largan is planning to install new equipment at the end of the third quarter of this year, with initial production focusing mainly on mobile phone products.
The starting date for voice coil motor production at the sites would depend on the needs of customers, he said.
In view of the poor phone consumption in the market, the company has been developing products for non-phone segments such as automotive and virtual reality or augmented reality lenses, Lin said.
However, demand for automotive lenses has also weakened in the past few months, he added.
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