Contract electronics manufacturer Inventec Corp (英業達) yesterday provided a positive outlook for its business next quarter as it resumes production in China.
“We have restarted about 95 percent of production in China,” Inventec president Maurice Wu (巫永財) told investors at a quarterly earnings conference in Taipei, referring to the company’s plants in Chongqing and Shanghai, which focus on the production of PCs and servers respectively.
With the company increasing shipments, sales next quarter are expected to improve from this quarter, as well as on an annual basis, Wu said.
“We have our hands full with orders right now, with clients hot on our heels,” he added.
However, first-quarter revenue is expected to fall as sales in the first two months of the year declined 34.56 percent year-on-year.
While the company has little order visibility in the second half of the year, PC sales, which contribute more than 80 percent of Inventec’s revenue, are expected to remain stable due to the company’s advantage in the segment, Wu said.
“We specialize in commercial laptops, which will mostly be spared” negative effects from the COVID-19 pandemic, he said, adding that demand could decline if US and European markets continue to be affected.
A long-term pandemic in North America and Europe would disrupt its server production in Juarez, Mexico, and Brno, Czech Republic, Wu said, adding that the firm would relocate production back to Taiwan if overseas operations are disrupted.
“Nevertheless, demand for data centers continues to grow,” he added, forecasting a high single-digit percentage annual increase in server shipments this year.
The company’s smart devices manufacturing arm, Inventec Appliance Corp (英華達), which makes Apple Inc’s Airpods, has relocated its production lines in Malaysia back to Shanghai, as the leased facility was shut down due to disease prevention measures there, Wu said.
With rising production costs in Shanghai, the company has set its sights on moving production to Vietnam, Inventec Appliance president David Ho (何代水) said, dismissing rumors about declining orders from Apple.
Inventec posted a net profit of NT$5.51 billion (US$181.75 million) for last year, a 15.26 percent year-on-year decrease, due to foreign-exchange losses and trade tensions, the firm said.
Earnings per share fell to NT$1.54 last year from NT$1.81 in 2018, it said.
The company’s board of directors yesterday proposed distributing a cash dividend of NT$1.3 per common share, representing a payout ratio of 84.42 percent.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
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