Yageo chairman Pierre Chen said the firm is benefiting from growing demand for high-end passive components from Europe, Japan and the US.
Yageo Corp (國巨), the world’s No. 3 multilayer ceramic capacitor supplier, yesterday gave an upbeat business outlook for next quarter, as robust demand for high-end products has helped to lift its book-to-bill ratio and keep inventory healthy.
Premium passive components used in vehicles, and industrial and medical devices account for 75 percent of the company’s overall revenue, compared with 30 percent in 2017, after it spent two-and-half years optimizing its product and customer lineups, Yageo said.
Yageo’s goal is to boost that share to 80 percent by 2023, with revenue contributions from the automotive segment rising to 22 percent from 18 percent at present, Yageo chairman Pierre Chen (陳泰銘) told an online media briefing after the company’s annual general meeting in New Taipei City’s Xindian District (新店).
“Yageo’s new structure is very different from that of the past,” Chen said. “We are no longer heavily dependent on the greater Chinese market to grow our business.”
Yageo is benefiting from growing demand for high-end passive components from Europe, Japan and the US, Chen said.
Last month’s sales were evidence of that, he said.
Sales last month increased 3.37 percent to NT$9.51 billion (US$339.73 million) from a month earlier, bucking a downtrend that was commonly seen in the past as Yageo’s Chinese customers entered inventory counting season in June.
The company said that its diverse product and customer portfolios have helped shield it from the ups and downs of the consumer electronics market.
Due to greater exposure to China’s consumer electronics market, Yageo’s global rivals saw their customers collecting excessive inventory due to poor sales in the market.
“We see that our customers have healthy inventory. Orders and customer demand are keeping good momentum,” Chen said. “We are still keeping our [book-to-bill] ratio at a high level. Growth momentum remains strong in the third quarter.”
Most production lines are running at more than 90 percent utilization, he said.
To cope with robust customer demand, Yageo expects capital spending to make up 33 percent of the company’s earnings before interest, taxes, depreciation and amortization this year, and 28 percent next year, before slipping below 20 percent in 2023.
Commenting on Yageo’s partnership with Hon Hai Precision Industry Co (鴻海) to make chips for electric vehicles, Chen said that it would help double Yageo’s revenue from Hon Hai.
Yageo shareholders yesterday approved a planned distribution of NT$10 per common share, including NT$2 per share from its capital surplus.
The firm reported earnings per share of NT$27.58 for last year.