Yageo saw gross profit margin hit 30% in Q1

Taipei, Feb. 23, 2004 (CENS)--Yageo Corporation, Taiwan's leading manufacturer of passive electronic components, saw gross profit margin climbed to 29.6% in the fourth quarter of last year from the first quarter's 20.5% and expected the figure to stand at between 29% and 31% in the first quarter of this year.

At a recent institutional investors conference, Yageo shocked the market with a projection that it will see average selling price (ASP) of MLCCs (multi-layer ceramic capacitors) drop by 3% up to 6% in the first quarter of this year, more than the average 2% drop for the entire sector.

Earlier this month, South Korea's SEMCO under the Samsung Electronics predicted the ASP for MLCC will rise by 7% in the first quarter of this year, indicating price of the product has stabilized.

Remko Rosman, president of Yageo, attributed his company's projection of the slide of the MLCC's ASP to the adjustment of production lines and the concentration of boosting sales to the mainland China's home-appliance market. He further explained mainland demands massive passive electronic components at low price, which has pushed down the ASP of the product.

But Rosman stressed that low ASP doesn't necessarily represent a low gross profit margin. Recently, Yageo's senior consultant T.M Chen boasted his company will challenge 40% in gross profit margin in three years, topping rival companies in Asia.

Beginning a business turnaround in the third quarter of last year, Yageo posted revenue of NT$4.219 billion (US$127.46 million) in the fourth quarter of last year, up 12.6% from the same period of last year and hitting a new quarterly. The company said it posted NT$76 million (US$2.29 million) and NT$52.6 million (US$1.58 million) in pretax and after-tax earnings, respectively, in the fourth quarter of last year. Earnings per share reached NT$0.02 in that quarter.

Yageo announced it saw combined sales reach NT$16.1 billion (US$486.4 million) last year, up 2.5% from the previous year. Despite the growth in sales, the company suffered after-tax losses of NT$769 million (US$23.23 million), or a loss of NT$0.35 (US$0.01) per share, last year. Compared to a loss of NT$2.14 (US$0.06) per share registered in 2002, the company has seen improvement in profit making. The company estimated it would be able to turn around this year.

At present, the company sees production capacity utilization rate stand at 92% for MLCCs and 90% for chip-based capacitors, much better than the rate of between 70 and 78% posted in the first half of last year.