Bangkok--11 May--JayDee Partners
MPT reports Q1’07 declining performance due to intensified competition in electronic and suspension assembly industries and negative impact from stronger Thai Baht.
Magnecomp Precision Technology announced financial results for Q1’07, suspension shipments recorded 91.8 million units, sales decreased to Baht 2,303.0 million comparing to Q4/06 due to lower average selling price resulting from the competitive pricing environment and the unfavorable translation impact of the stronger Thai Baht. Nonetheless, the company believes that the progress of product transition towards additive circuit technology, expansion of customer base and focus on reducing costs will help turnaround the company’s status within the near future.
Mr. Steven Campbell, Chief Executive Officer of Magnecomp Precision Technology had announced the financial performance of Q1’07 ended 1 April 2007, MPT shipped 91.8 million units of suspension assemblies in Q1’07, essentially flat when compared to the record of 92.4 million units shipped in the previous quarter but over 8% more than the corresponding quarter a year ago. Notably, shipments of 3.5-inch suspensions increased sequentially.
For Q1’07, MPT recorded sales of Baht 2,303.0 million, 7% lower than the previous quarter due mainly to a higher mix of mature products which generally have lower selling prices, lower overall average selling price (“ASP”) resulting from an extremely competitive pricing environment, and an unfavorable translation impact on revenues when translating U.S. dollar-denominated sales against a strengthening Thai Baht. As a result, MPT reported a net loss of Baht 113.4 million or Baht 0.05 per share for Q1’07. This compares to a net loss of Baht 95.2 million for Q4’06, excluding extraordinary items, and a net profit of Baht 141.8 million for Q1’06.
“Recent announcements from our key customers and competitors indicate a difficult first quarter for hard disk drive (“HDD”) and suspension suppliers characterized by intense price competition. Despite the challenging environment, we believe we gained market share during Q1’07, particularly in the 3.5-inch platform, with our unit shipments near the record volumes seen in the previous quarter. In contrast our largest competitor experienced a decline in shipments during Q1’07,” commented Mr. Steven Glenn Campbell.
“The transition of our product portfolio towards additive circuit technology continues to exceed expectations. Shipments of additive circuit suspensions accounted for over 61% of total volume during the quarter and are expected to grow to over 90% during the second half of 2007. This compares with additive circuits suspensions accounting for 26% of total volume for Q1’06. We also have far greater penetration and experience with additive circuits than our largest competitor. This will help drive MPT towards a broader product mix and deeper penetration into HDD customers going forward.”
In addition, MPT’s Additive Circuit Gimbal plant in Chang An, China was recently qualified as a manufacturing site by a major customer and is working towards component qualification around the end of 2007.
“Increasingly precise and capable circuits will be essential for suspension assemblies in the near future. Additive process technology for circuits will enable us to meet this critical requirement for future HDD products.”
"We are also making significant progress in expanding our customer base and are in qualification with a major Asian HDD manufacturer. Looking forward, we remain focused on further aligning our business model, cost structure and capital expenditure with what appears to be weaker-than-normal industry seasonality during Q2’07, with the goal of accelerating our return to profitability,” concluded Mr. Campbell.
About MPT
Magnecomp Precision Technology Public Company Limited specializes in designing, developing and manufacturing suspension assemblies for the Hard Disk Drive industry with a number of subsidiaries specializing in precision stamping, chemical etching, additive circuits, and tool and die fabrication, supporting its core business. MPT has manufacturing facilities in both China and Thailand, and a Research and Development Technology Center located in California, close to its major customers in the USA. For more information, please visit the MPT website at www.MagnecompPrecision.com .
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