Machine-tool Firms Uncertain About Second-half Performance

Taipei, Sept. 4, 2008 (CENS)--The gloomy global economy is making major machine-tool manufacturers in Taiwan uncertain toward production and sales in the second half of this year, while some small-cap manufacturers of low-tier CNC lathes are cutting work days.

Sluggish sales of domestic electronic industry have reduced orders placed with some machine-tool manufacturers who also produce PCB (printing circuit board) drilling machines since the beginning of June.

The financial statements prepared by listed machine tools firms in Taiwan showed plummeting operating profit margins in the first half of this year, with Goodway Machine Corp., Taiwan's largest manufacturer of CNC lathes, reporting an annual decline of 5.08 percentage points in operating profit margin in the same period.

Others, including Awea Mechantronic Corp. and Roundtop Machinery Industries Co., saw operating profit margin drop over four percentage points year-on-year in the first half of this year.

Sharp price hikes in cast iron have been seriously impacting domestic machine-tool firms' operations.

Nevertheless, Tongtai Machine & Tool Co. reported a 12.46% year-on-year increase to reach NT$377 million (US$11.96 million at US$1:NT$31.5) in after-tax earnings in the first half of this year, which the company attributed to the contribution from its China operations.

Despite outstanding performance in the first half, Tongtai is uncertain about operations in the second half. The company said it originally anticipated its sales of PCB drilling machines would reach NT$2.1 billion (US$66.66 million), with the sales of such machines reaching only 49.25% of the entire-year target in the first half of this year.

Goodway noted over 40% of its total sales come from high-value-added multi-stack CNC lathes, as well as reporting NT$290 million (US$9.2 million) in orders received for such lathes in July alone.

Taiwan Takisawa Technology Co. said it saw July sales reach only NT$215 million (US$6.82 million), hitting the second-lowest monthly level since the beginning of this year, with the supplier feeling pessimistic about its August performance. But the company predicted it would see monthly sales return to normal-at NT$250 million (US$7.93 million) in September this year.