Leading industrial PC maker Advantech Co (研華) is cautious about its business outlook in the near term after posting its weakest earnings per share in seven quarters, the company said yesterday, citing the effects of high global inflation and geopolitical tensions.
For this quarter, the company expects revenue momentum to remain weak, as the impact of softening demand has not yet subsided, Advantech said in a statement after a board meeting.
The company’s book-to-bill ratio has been on a downtrend and has remained below 1 over the past few quarters, as consumer electronics clients remained conservative and slowed order pull-in.
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The ratio was 0.82 percent last quarter, compared with 0.79 percent in the second quarter and 0.82 percent in the first quarter, company data showed, suggesting a downbeat sales outlook going forward.
“Advantech maintains a conservative outlook for the first half of 2024, with a short-term focus on profitability and operational efficiency, while maintaining a positive outlook for the mid-long term,” the company said.
Advantech, the first regional industrial PC vendor dedicated to smart cities and the Internet of Things, reported a net profit of NT$2.58 billion (US$79.57 million) in the July-to-September quarter, down 18.88 percent from a year earlier and 14.01 percent from the previous quarter.
Earnings per share were NT$3.01 last quarter, the lowest since the fourth quarter of 2021, when the company earned NT$2.94 per share.
Third-quarter revenue was NT$15.01 billion, down 19.38 percent year-on-year and 11.87 percent quarter-on-quarter, the company said.
Gross and operating margins declined last quarter to 40.09 percent and 16.7 percent respectively, it added.
Overall, Advantech’s cumulative net profit in the first three quarters of the year increased 4.04 percent year-on-year to NT$8.55 billion, or earnings per share of NT$9.98, while total revenue fell 4.13 percent to NT$49.43 billion from a year earlier.
By region, sales to North Asia in the first three quarters outperformed other markets with single-digit percentage growth, while shipments to Europe were flattish on an annual basis, the company said.
Shipments to North America fell by a single-digit percentage due to sluggish demand, and sales dropped by double-digit percentages in China, Taiwan and emerging markets, affected by the economic slowdown in China and weak demand for semiconductor equipment, it said.
“Due to the impact of a global economic slowdown and uncertainty in China’s recovery, both revenue and profitability in the third quarter showed double-digit percentage declines on an annual basis, while cumulative revenue in the first three quarters also decreased year-on-year,” Advantech chief financial officer and president of general management Eric Chen (陳清熙) said in the statement.
“However, the profitability structure remained stable and slightly outperformed on the back of falling raw material prices,” Chen added.
For this quarter, the company forecast revenue to reach US$4.65 billion to US$4.85 billion, while gross margin would be 38.5 percent to 40.5 percent and operating margin would be 16 percent to 18 percent.
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