September 30, 2023

Costaalegre Restaurant

Learn marketing business

Largan shares under pressure on Q2 results

2 min read

Taipei, July 9 (CNA) Shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., came under heavy downward pressure Friday morning in the wake of a plunge in net profit in the second quarter of this year, dealers said.

As of 10:02 a.m., Largan’s share price had lost 4.76 percent, falling to NT$3,000.00 (US$107) per share, with 572,000 shares changing hands on the Taiwan Stock Exchange, where the weighted index fell 1.26 percent to 17,641.04 points.

Soon after the local equity market opened, Largan shares faced sell-off as investors were motivated to dump the stock due to the company’s weakening bottom line for the April-June period, as disclosed in an investors conference held on Thursday.

In the conference, Largan said its net profit for the second quarter stood at NT$2.96 billion, down 44.3 percent from the first quarter, with earnings per share at NT$39.62, compared with NT$22.07 a quarter earlier.

Its gross margin — the difference between revenue and cost of goods sold — fell to 60.33 percent in the second quarter from 64.77 percent in the first quarter. The second quarter figure was also lower than the NT$68.59 recorded a year earlier.

According to Largan, the reduced net profit for the second quarter came after the company suffered NT$1.23 billion in foreign exchange losses on the back of a stronger Taiwan dollar.

The forex losses, which eroded Largan’s EPS by NT$9.17, came close to the company’s paid-in capital of NT$1.34 billion.

Largan said the deteriorating gross margin in the second quarter largely reflected relatively smaller economies of scale in operations and a limited product portfolio.

Adam Lin (林恩平), Largan CEO, said orders received by the company showed signs of growing in July, compared to June, but it still remained uncertain over market prospects for August.

In June, Largan’s consolidated sales totaled NT$3.37 billion, up 1 percent from a month earlier, stopping a two-month falling streak. But the June sales fell 19 percent from a year earlier, and market analysts said the fall partly resulted from a loss of orders from China’s Huawei Technologies Inc. due to Washington’s sanctions that went into effect in mid September 2020.

With competition in the smartphone camera lenses market on the rise, Lin said Largan has entered the market for camera lenses used in vehicles to broaden its product mix.

Lin added that his company has set up a task force to map out the strategies for developing new products for this market.

In the first half of this year, Largan’s net profit fell almost 30 percent from a year earlier to NT$8.28 billion, with EPS at NT$61.69.

(By Han Ting-ting and Frances Huang)

Enditem/cs | Newsphere by AF themes.