Passive components maker Yageo Corp said revenue would be flat or grow modestly this quarter amid steady market demand. Yageo’s revenue has dropped for three straight quarters amid sluggish demand and excessive inventory.
In the first quarter of this year, revenue contracted 9.5 percent quarter-on-quarter and 13.4 percent year-on-year to NT$26.1 billion (US$852.6 million), while net income shrank 0.8 percent quarterly and 33.8 percent annually to NT$4.13 billion, the company said.
Yageo CEO David Wang said revenue would stop falling this quarter and likely be flat or increase slightly from last quarter.
“Hopefully, this will be a good sign,” he told an online investors’ conference in Taipei. “Visibility is not clear yet, but the second half of the year is usually a high season and will be slightly higher than the first half.”
Gross margin would improve slightly from 33 percent in the first quarter, primarily due to cost management and a better product portfolio, he said. Yageo’s gross margin has fallen since it posted 38.8 percent in the second quarter of last year. The average selling prices of Yageo products is expected to be stable this quarter, it said.
INVENTORY WOES
Yageo executive vice president of global sales and marketing Claudio Lollini said the firm’s inventory level remains quite high, particularly at global distributors, even though the situation is slightly better in China.
Demand for passive components used in smartphones and laptop computers has not returned to the pre-slump level, Lollini said, but added that Yageo continues to see encouraging signs from the industrial and automotive segments.
Components for the two segments were the biggest revenue sources last quarter, contributing 23 percent and 31 percent respectively.
Factory utilization would hold steady at 70 percent for its premium products this quarter, Wang said, adding that utilization for its commodity products would be unchanged at 40 to 50 percent.
Premium passive components, including multilayer ceramic capacitors, contributed 75 percent to Yageo’s total revenue last quarter, with commodity components making up the remaining 25 percent.