Asustek Computer Inc (華碩) yesterday reported a 14 percent sequential decline in net profit to NT$10.43 billion (US$351.1 million) last quarter and forecast that Chinese lockdowns and geopolitical risks in Europe would reduce its PC shipments by 10 percent this quarter.
Shipments of PC-related components, including motherboards and graphics cards, are expected to dip by between 10 and 15 percent sequentially this quarter, the company said.
PCs accounted for 66 percent of Asustek’s total revenue last quarter, while components contributed 33 percent, company data showed.
The company, headquartered in Taipei’s Beitou District (北投), also factored in the impact from rising inflation, logistics snarls and flagging consumption prospects.
“The impact of the Russia-Ukraine war is spreading to other countries in Europe due to [rising] energy prices,”Asustek co-CEO Samsun Hu (胡書賓) told an online investors’ conference in Taipei. “In some European countries, electricity bills have surged three times, which is squeezing demand for PCs and other goods. We saw weakening PC momentum in Europe in the past two months.”
COVID-19 restrictions in China, surging inflation and monetary tightening in the US are also dampening demand for PCs, Hu said.
To stimulate demand, Asustek is in discussion with its CPU suppliers and retail partners to launch promotional campaigns, Hu said.
Commenting on key component supply constraints, Hu said chip supply has improved.
With China stubbornly sticking to its “zero COVID-19” policy, shortages of precision electronics and modules have overtaken chips to become the new “gating items,” Hu said.
Asustek said it is cautiously optimistic about the second half of the year, when shipments could pick up due to back-to-school purchases, pandemic-related pent-up demand and the year-end holiday shopping spree.
The company kept its key financial targets for this year unchanged, except for a short-term dip in the current quarter, saying that revenue would increase more than 10 percent annually this year and operating margin would be above 6 percent.
Net profit last quarter fell 14 percent quarter-on-quarter from NT$12.06 billion.
On an annual basis, it expanded 7 percent from NT$979 million.
Earnings per share fell to NT$14 from NT$16.2 in the prior quarter, but rose from NT$13.2 a year earlier.
Operating margin fell to 7.87 percent, compared with 8.69 percent in the previous quarter and 10.69 percent in the same period last year.
To recruit and retain talent, Asustek said it plans to raise employee pay in the first half of the year.
In addition, the company is looking at setting up an employee stock ownership trust this year at the earliest, it said.
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