Pegatron Corp (和碩), one of Apple Inc’s iPhone assemblers, yesterday reported that net profit last quarter soared 46.33 percent from the previous quarter, reflecting rising sales of computing products, consumer electronics and communications devices during the industry’s peak season.
Net profit in the July-to-September period totaled NT$4.58 billion (US$141.66 million), compared with NT$3.13 billion in the previous three months, the electronics manufacturer said in a document released following the company’s earnings conference.
Third-quarter revenue was NT$315.77 billion, up 12.46 percent from NT$281.71 billion in the second quarter and higher than analysts’ estimates of NT$310 billion, while gross margin improved 0.1 percentage points to 3.85 percent, lower than analysts’ forecast of 4 percent.
Photo: Reuters
Last quarter’s net profit translated into earnings per share of NT$1.72, the highest this year and also higher than the market consensus of NT$1.4.
However, the company’s top-line and bottom-line results last quarter remained lower than the same period last year — with revenue down 10.5 percent and net profit falling 13 percent — due to still softening end-market demand for computing products and consumer electronics amid a slowdown in the global economy, the company said.
Apart from handsets, Pegatron manufactures notebook and desktop computers, wearable devices and game consoles, with major clients including Apple, Sony Corp, Microsoft Corp and Asustek Computer Inc (華碩).
Last quarter, communications devices accounted for 58 percent of the company's revenue, followed by consumer electronics at 20 percent and computing products at 11 percent, it said.
To improve its product mix with high-margin goods, the company has in the past few years developed its automotive electronics business with products such as electronic control units, center consoles, in-vehicle entertainment devices and advanced driver-assistance systems.
Even though Pegatron has cut into the supply chains of several Japanese and US electric vehicle makers, including Tesla Inc, automotive electronics’ contribution to the company’s overall revenue still lags far behind computing products, consumer electronics and communications devices, company data showed.
The company has also increased exposure to the server business and plans to make inroads into the artificial intelligence server business next year, Pegatron said.
The company said it would work with subsidiary ASRock Inc (華擎) on server product launches, with shipments mainly to US computing power services suppliers, adding that it would continue sampling out products to the four major US cloud service providers.
In the first three quarters of this year, Pegatron’s net profit totaled NT$10.72 billion, down 6.7 percent year-on-year, or earnings per share of NT$4.02. Revenue in the first three quarters decreased 4.76 percent to NT$914.61 billion and gross margin fell 0.77 percentage points to 3.61 percent.
For this quarter, demand for computing products and consumer electronics is expected to slow, while sales of communications devices would rise due to new product launches, the company said.
Overall, revenue this quarter would be this year’s peak driven by strong handset shipments in the holiday season, it said.
Next year, demand for consumer electronics and PCs is likely to slow down in the first half of the year and pick up in the second half, the company said.
Automotive electronics’ revenue is expected to increase by double-digit percentage points next year and contribute more than 10 percent to the company’s overall revenue in 2025, it said.
To provide clients with more choices, the company has expanded its overseas operations.
Production capacity in China, Mexico, India, Indonesia, Vietnam, the Czech Republic and elsewhere abroad accounts for about 15 percent of the company’s total capacity, it said.
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