TAIPEI: Casetek Holdings Ltd , which supplies metal casings for Apple Inc’s MacBooks and iPads, yesterday reported its lowest quarterly net profit in two years, dragged down by rising labor costs and development expenses for a new notebook project.
Net profit dropped 19.37 percent to NT$903 million (US$29.34 million) last quarter, from NT$1.12 billion a year ago. On a quarterly basis, the figure represented a decline of about 40 percent from NT$1.5 billion.
“The new notebook project took longer than expected to develop, increasing our expenses and labor costs in China, which consequently affected profitability,” chief financial officer Jonathan Chang told a teleconference.
The company said that gross margin slid to 18.6 percent last quarter from 27.1 percent a year ago and from 26 percent a quarter ago, as it increased its headcount and raised wages in China to cope with customer demand.
Rising labor costs eroded the gross margin by 2 percentage points, Chang said.
Casetek chief executive Gary Chuang said that development of the new notebook project took six months longer than expected.
However, Chang was optimistic about prospects ahead.
He said that he expected revenues this month to represent the trough for this year due to the seasonal slowdown, and that demand would pick up significantly next month, thanks to increasing orders for notebook and tablet casings from its major client.
Following the launch of its major client’s new notebook last month, Chuang said he expected Casetek’s factory utilization rate this quarter to rise from last quarter’s 70 percent at best.
KGI Bank yesterday forecast that Casetek’s revenue this quarter would drop 15 percent to NT$6.78 billion from NT$7.98 last quarter due to weak demand for Apple’s iPad products, which accounted for between 60 percent and 70 percent of Casetek’s total revenues.
Chuang said the company would enter its peak season earlier this year due to growing orders for existing products and upcoming new projects.
To meet the rising demand, Casetek’s board of directors had approved the purchase of 1,000 computer numerical control machines to expand capacity and develop new products in the second half of the year, Chuang said.
Order visibility for all products through the end of the year is good, Chuang said, adding that production would be running at full capacity in the second half.
Casetek’s board also approved a plan to distribute a cash dividend of NT$7.2 per share based on last year’s net income of NT$4.92 billion, or NT$14.49 per share.
That translates into a payout ratio of 49.68 percent, little changed from last year’s 49.72 percent.
The planned cash dividend implies a dividend yield of 3.95 percent, based on Casetek’s closing share price of NT$182 in Taipei trading yesterday.
