Rechi saw sales expand 47% in Q1

Taipei, April 20, 2004 (CENS)--Thanks to the influx of orders, Rechi Precision Co., Ltd., Taiwan's largest and the world's fourth-biggest manufacturer of air compressors, saw annual sales growth hit as high as 47% in the first quarter of this year.

In light of the skyrocketed steel price, Rechi Precision, the flagship of Rechi Group, recently announced it would raise selling prices of air compressors in April, the third price hike since the end of last year. The company has raised the selling prices of air compressors by over 10% since the end of last year.

Rechi Precision currently concentrates on the production of scroll compressors, refrigerant rotary compressors, reciprocating- and screw-type air compressors, and golf club heads.

At present, the global supply shortfall is expected to reach four million air compressors because most manufacturers around the world have moved to control production capacity and digest inventories over the past several months.

Rechi Precision President Lee Wen-chin said the supply shortfall has caused a chaotic market order. Lee noted many manufacturers are supplying air compressors in limited amount while buyers have to line up and bring cash to struggle for spot goods.

Lee noted global demand for air compressors reach 30 million-strong units per year and the distributors usually maintains one and a half years of inventories. Last year manufacturers moved to cut output and digest inventories in light of sluggish demand and a price hike in raw material.

But recently the market demand turned strong along with hot sales of air conditioners and refrigerators due to the prolonged hot season globally and the increased demand of mainland manufacturers of home appliances. It is expected the mainland will demand over 21 million air compressors this year.

To meet the booming demand in the coming hot season, many home-appliance manufacturers are making all-out efforts to seek sources of air compressors.

Rechi Group boasted it shipped 1.57 million air compressors in the first quarter of this year, up 47% from 1.06 million posted in the same period of last year. Of this, Rechi Precision accounted for 1.485 million units in the first quarter, up 44.12% from 1.03 million units registered in the same period of last year. The entire group had NT$1.753 billion (US$53.44 million at US$1:NT$32.8) in sales for the first quarter, up 54.3% from the corresponding period of last year.

An institutional investor estimated Rechi Precision, which is listed on domestic over-the-counter securities market, will see pretax earnings reach NT$400 million (US$12.19 million) this year, double that of last year.

Rechi Precision boasted it has recently acquired orders for 1.2 million air compressors from the mainland's No.2 air conditioner manufacturer Midea Group. The company is optimistic about its sales prospects because some other air-conditioner manufacturers, including Haier Group and TCL, have promised to increase orders.