Leading industrial PC maker Advantech Co (研華) is cautiously optimistic about its business outlook this year, as economic headwinds remain in the near term, the firm said yesterday, after last quarter posting its weakest earnings per share in eight quarters.
Advantech, the first regional industrial PC vendor dedicated to smart cities and the Internet of Things, reported net profit of NT$2.29 billion (US$72.5 million) in last year’s fourth quarter, down 9.58 percent from a year earlier and 10 percent lower than the previous quarter.
Earnings per share were NT$2.67 last quarter, the lowest since the fourth quarter of 2021, when the company earned NT$2.94 per share.
Photo: CNA
Fourth-quarter revenue was NT$15.14 billion, down 12 percent year-on-year and 0.85 percent quarter-on-quarter, the firm said.
However, its gross margin increased last quarter to 41.1 percent, up 2.3 percentage points from a year earlier and 1 percentage point higher than the previous quarter, it added.
The company expects this quarter’s revenue to total US$440 million to US$460 million — or NT$13.8 billion to NT$14.4 billion in New Taiwan dollar terms — and it forecasts gross margin to be within the range of 39 percent to 41 percent, Advantech said in a statement after an earnings conference.
While the firm’s book-to-bill ratio has shown signs of a gradual recovery in the first two months of the year at 1.01, compared with 0.9 in the fourth quarter of last year, after regional markets have bottomed out, visibility in the industry remains unclear in the near term, Advantech chief financial officer and president of general management Eric Chen (陳清熙) said.
The company’s operations would fare relatively well in the second half of the year compared with the first half, which would see revenue decline year-on-year amid weak global demand, Chen added.
Based on the company’s current order visibility, sales in South Korea, Taiwan and Latin America would be relatively good, compared with the US and Europe, which together account for about 50 percent of its total revenue, Chen said.
The company maintains a neutral-to-optimistic view about demand prospects in China, he added.
Overall, Advantech’s cumulative net profit last year edged up 1 percent year-on-year to NT$10.84 billion, or earnings per share of NT$12.65, while total revenue fell 6 percent to NT$64.57 billion. The firm’s gross margin rose 2.5 percentage points to 40.5 percent.
By region, sales to North Asia last year outperformed other markets with 1 percent growth, while Taiwan's market performed the worst with sales falling 22 percent, the company said.
Shipments to emerging markets dropped 20 percent and sales in China fell 19 percent, while those in North America and Europe were down by 6 percent and 4 percent respectively, it said.
Advantech's board of directors has approved a proposal to distribute a cash dividend of NT$9.5 per share, it said.
The proposed cash dividend, if approved by shareholders on May 30, would represent a payout ratio of 75.1 percent as the company aims to maintain a high payout policy, it added.
The 6 percent decrease in revenue last year marked the largest fall in Advantech’s history, which reflected not just weakness in external demand, but also a deficiency in the firm’s business model, Advantech chairman K.C. Liu (劉克振) said.
The company’s operations in Taiwan mainly focus on designing and its Chinese operations are on manufacturing, but it sells products — mostly hardware products — to other overseas markets, Liu said, adding that Advantech needs to update its business model and prepare for the era of artificial intelligence of things.
In addition, the company would seek ways to bolster its long-term added value by 2030, including mergers and acquisitions, he added.
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