Taiwan's Yageo 2nd quarter profit may rise on capacity rise
( 2001-07-25 11:00) (7)
Yageo Corp, the biggest maker of parts that control the flow of electricity in computer and mobile-phone circuits, will probably say profit in the second quarter rose from a year ago, after the company added capacity.
Net inncome may have risen to NT$915.4 million (US$26.2 million), or 49 NT cents a share, in the three months ending June 30, compared with NT$801.6 million, or 45 NT cents, according to the average forecast of five analysts surveyed by Bloomberg News.
Yageo boosted capacity after it bought two units from Royal Philips Electronics NV last May. Since then, slowing sales of personal computers and mobile phones in the US and Europe cut demand for the parts used to run them, dragging down their prices and crimping profit. Yageo's profit in the first quarter was NT$1.3 billion. A recovery is unlikely this year, analysts said.
"The second half will be about the same as the second quarter," said Eric Twu, an analyst at Sinopac Securities Co. "There won't be an obvious recovery this year."
Yageo will report results after the Taiwan stock market closes Wednesday.
Outlook
Computer sales fell in the second-quarter, the first decline since 1986, Dataquest Inc said last week. The market researcher expects global PC sales to grow 6.5 percent this year, compared with 15 percent in 2000.
Mobile phone sales will show little growth from 405 million handsets last year, according to Nokia Oyj, the biggest cellular-phone maker. Sales may drop to as few as 370 million units, analysts at Morgan Stanley Dean Witter said.
Slowing sales led Yageo to cut its full-year pretax profit forecast last week by a fifth to NT$5.7 billion. Yageo cut its sales forecast from Taiwan operations by 22 percent to NT$7.2 billion, and group sales by 17 percent to NT$26 billion. Second- quarter Taiwan sales rose 9 percent on year to NT$1.7 billion.
Yageo, whose customers include Solectron Corp. and Flextronics International Ltd, the biggest contract electronics manufacturers, was also forced to offer a discount on the price of 40 million global depositary receipts sold on July 12 to help repay loans for the Philips plants and move production to China.
In May, Yageo fired 570 of its 7,220 workforce as declining demand forced it to cut costs and delay expansion plans.
Yageo shares Tuesday fell 70 NT cents, or 3 percent, to NT$22.80. The stock has fallen 22 percent in the past year, compared with a 50 percent fall in the main TWSE Index.
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