Leading industrial PC maker Advantech Co (研華) yesterday offered a conservative outlook for the second half of the year after posting record sales and profit in the first half, citing China’s shaky economic recovery and high global inflation as factors.
For this quarter, the company expects revenue momentum to weaken on the back of a significant slowdown in new orders, Advantech chief financial officer and president of general management Eric Chen (陳清熙) told an investors’ conference in Taipei.
Third-quarter sales are likely to drop 10 percent from the previous quarter, or down 20 percent from a year earlier, the company said, adding that the outlook for the fourth quarter would improve slightly.
Photo: Fang Wei-chieh, Taipei Times
That comes as the company's book-to-bill ratio has been on a downtrend and remained below 1 over the past few quarters due to weakening order momentum from clients and waning demand for consumer electronics.
The ratio fell further to 0.79 last quarter, from 0.82 percent in the first quarter and 0.92 percent in the fourth quarter of last year, suggesting a downbeat sales outlook going forward.
Advantech, the first regional industrial PC vendor dedicated to smart cities and the Internet of Things (IoT), expects revenue this quarter to range between US$480 million and US$500 million, it said.
Gross margin would be between 38.5 and 40.5 percent, while operating margin would be between 16 and 18 percent, it added.
“Despite the anticipated slowdown in revenue momentum in the second half of the year, the company’s overall profitability is projected to steadily increase, as raw material prices normalize and operating efficiency improves,” Chen said.
Advantech reported net profit of NT$3 billion (US$94.9 million) in the second quarter, up 22.26 percent from a year earlier and 1.52 percent from the previous quarter, or earnings per share of NT$3.51, the third-highest in the company’s history and beating market expectations.
Second-quarter revenue was NT$17.03 billion, up 1.21 percent year-on-year, the company said.
Both gross and operating margins improved last quarter and outperformed the company’s historical average to reach 41.2 percent and 20.1 percent respectively, it added.
Overall, Advantech’s cumulative net profit in the first half of the year increased 18.55 percent year-on-year to NT$5.96 billion, or earnings per share of NT$6.97, while revenue grew 4.49 percent to NT$34.42 billion, both record highs.
By region, sales to Europe and North Asia in the first half remained strong, rising 13 percent each from a year earlier, while shipments to North America rose 4 percent.
However, sales to China fell 17 percent due to sluggish demand, the company said.
Sales dropped 27 percent in Taiwan and shrank 15 percent in emerging markets in the first six months compared with a year earlier, it added.
The company said its embedded IoT group showed robust sales growth in the first half, increasing 13 percent from a year earlier, while applied computing and industrial cloud groups reported single-digit percentage growth over the same period.
However, the industrial IoT group saw sales fall 8 percent from a year earlier, affected by China’s slowdown, while the service IoT group’s sales dropped 13 percent due to the deceleration of shipments for major medical and retail projects, the company said.
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