Ability Co.’s Q2 Gross Profit Margin Hits New 7-Quarter High

Taipei, Aug.29, 2012 (CENS)--Ability Enterprise Co., a Taiwanese original design manufacturer (ODM) of digital cameras, saw gross profit margin in the second quarter hit 10.18%, exceeding 10% for the first time in seven quarters, with net profits up 23% quarter on quarter (QoQ), NT$0.89 (US$0.03) in earnings per share (EPS), due to increasing average sales price (ASP), slipping material cost, and appropriate cost controls. The firm’s net profits in the first half shot up 83.5% year on year (YoY), with NT$1.61 (US$0.054) in EPS.

An institutional investor predicts the company to see sub-5% increase in ASP in the third quarter, enabling it to secure an equal or slight growth of profits in the second half, challenging annual EPS of NT$3.2~3.5 (US$0.107~0.117).

Ability is cautious towards operation in the second half as improving camera function in smart phones is replacing lightweight digital cameras, motivating Canon and Nikon to gradually reduce production of such models. Therefore, Ability has shifted focus to high-end digital single lens reflex (DSLR) cameras, also mirrorless models that generate faster demands.

Such product shift enabled Ability to see second-quarter ASP rise steadily, with gross profit margin hitting a new seven-quarter high to 10.18%, and 9.6% in combined gross profit margin in the first half, higher than the 6.86% of the same period of last year.

S.Y. Wang, chief financial officer of Ability, predicted that, with the EU debt crisis and peak season in the third quarter, revenues in the second half will equal to that in the first, with gross profit margin in the second half to be lower than the first.