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Casetek Holdings net income rises 68.4% to $49m

Casetek Holdings net income rises 68.4% to $49m

TAIPEI: Casetek Holdings Ltd, which mainly supplies metal casings for Apple Inc, yesterday reported better-than-expected net profits for last quarter, thanks to strong demand for MacBook and iPad products.

Net income rose 26.2 percent annually and 68.4 percent quarterly to NT$1.61 billion (US$49.2 million) last quarter, beating consensus estimates of NT$1.49 billion.

“We expect sales this quarter to be flat or to increase from last quarter’s NT$10.1 billion… we are working to secure more orders from our client,” Casetek chief executive officer Gary Chuang told a teleconference.

Apart from seeking quarterly revenue growth, the company aims to raise its notebook business’ profitability by reducing fixed costs and increasing yields, Chuang said.

Casetek joined Apple’s MacBook supply chain in the second quarter of this year.

Notebook sales contributed 30 percent to the firm’s overall revenue last quarter, while tablets accounted for 60 percent, Casetek chief financial officer Jonathan Chang said.

The firm is looking to raise sales contribution from notebooks, as its main client’s global tablet shipments is slowing, Chang said.

According to International Data Corp (IDC), iPad shipments plunged 19.7 percent to 9.9 million units last quarter from the 12.3 million units sold over the same period last year.

“We are working on narrowing the big revenue gap between the slow and peak seasons,” Chuang said.

To diversify its product portfolio, Casetek is to unveil a new capital expenditure plan before the second quarter of next year, he said.

“The capital expenditure plan, which would total US$660 million, would be for a new project for our main client,” Chang said.

He declined to confirm if the project is for a new iPhone model.

Casetek is building a new plant in China’s Zhejiang Province, with an initial investment of US$50 million, Chang said.

The plant is expected to become operational in the second quarter of next year and would supply metal casings for the client’s new project, he said.

Commenting on the company’s better-than-expected performance last quarter, Chang said that sales and profitability were driven by its main client’s strong demand for notebooks and early shipment request for tablets.

Gross margin was 26.6 percent last quarter, beating the company’s forecast of 25 percent, thanks to an improvement in notebook yields, he said.

Last quarter’s margin rose 1 percentage point from last year’s 25.6 percent and was 5.5 percentage points higher than the second quarter’s 20.1 percent.

In the first three quarters of the year, Casetek’s sales totaled 26.28 billion, up 14.35 percent from NT$22.98 billion in the same period last year.

Casetek shares gained 0.63 percent yesterday, outperforming the broader market, which edged down 0.08 percent.