Merry Electronics Co (美律), a supplier of headsets and speakers for notebooks and smartphones, yesterday said that third-quarter revenue would improve from the second quarter due to peak season demand and stronger headset shipments. However, year-on-year growth is projected to remain flat due to the sharp appreciation of the New Taiwan dollar.
The Taichung-based company reported second-quarter revenue of NT$10.33 billion (US$349.9 million), a 0.31 percent increase from the same period last year.
The NT dollar’s 7.9 percent year-on-year appreciation against the US dollar erased what could have been 8 percent annual growth in revenue last quarter, as the company’s sales are all denominated in US dollars, Merry president Allen Huang (黃朝豐) said at an online earnings conference.
Photo courtesy of Merry Electronics Co
For every 1 percent appreciation of the NT dollar, the company’s revenue is reduced by 1 percent, and gross margin is cut by 0.3 percentage points, Huang said.
Gross margin dropped to 11.71 percent in the second quarter, down from 13.14 percent a year earlier, due to exchange-rate fluctuations, client-driven price cuts in April, shared tariff costs and rising labor costs in Southeast Asia, he said.
The figure is expected to improve this quarter as the company continues to optimize costs and its product portfolio, he added.
Net profit plunged 99.46 percent year-on-year to NT$2.62 million in the second quarter, compared with NT$491 million a year earlier, while earnings per share also decreased to NT$0.01 from NT$2.24, the company said.
The company reported a foreign exchange loss of NT$472 million, a significant drop from a gain of NT$129 million in the same period last year. Nonoperating losses also widened to NT$197 million in the second quarter, it said.
Operating expenses rose 2.12 percent year-on-year to NT$965 million, driven by an expansion in research-and-development staffing, a shift in production from China to Vietnam and Thailand, and the development of new product lines, including speakers, Huang said.
In the second quarter, headsets — including true wireless stereo (TWS) earphones, gaming headsets and audio headsets — accounted for 70 percent of the company’s total revenue, while speakers contributed 23 percent and other products, such as microphones and hearing aids, made up 7 percent.
The company expects shipments of audio and gaming headsets to rise year-on-year this quarter, although TWS earphone shipments might decline, Huang said.
While overall momentum is expected to improve from the previous quarter, revenue for the segment is likely to remain flat from the previous year due to exchange-rate fluctuations, he said.
Speaker shipments are expected to rise from the previous quarter, but decline year-on-year due to weaker demand for smartphone and earbud speakers, he added.
Microphone shipments are expected to decline both annually and sequentially, as the front-loading effect fades, while hearing aid shipments are expected to continue growing this quarter, driven by new orders from a leading US over-the-counter hearing aid client, Huang said.
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