AAC Tech cautions as profit plunges 41pc to 2.2b yuanBusiness | Winnie Lee 26 Mar 2020
AAC Technologies (2018) said net profit plunged 41.5 percent year-on-year to 2.22 billion yuan (HK$2.43 billion) in 2019 and declared no final dividend to maximize liquidity amid the Covid-19 outbreak.
AAC said it expects net profit and gross profit margin to be adversely impacted in the first quarter this year due to an extended period of work suspension after the Chinese New Year.
The group expects pricing pressure and reduction of revenue from dampened consumer sentiment for smartphones.
Revenue dropped 1.4 percent to 17.88 billion yuan last year from the year before. Basic earnings per share were 1.84 yuan. Gross profit margin declined 8.6 percentage points year-on-year to 28.6 percent as the average price of traditional products was suppressed and the performance improvement speed slowed down despite the improvement of the overall production volume and efficiency.
AAC Technologies managing director Richard Mok emphasized the company's cash is robust with 4.8 billion yuan.
He added that the cash flow will be put into capital expenditure as well as research and development.
Capital expenditure for the first half will be dropped and adjusted according to the environment in the second half.
The dividend payout ratio has been maintained at 40 percent since 2009. Under normal operating and economic situation, the group will keep the dividend policy, Mok said.
Head of investor relations Joyce Kwok said over 80 percent of production had resumed in March. There had been no order cancelations in quarter two but some orders had to be delayed, she added.
The business in quarter two is at normal operations, resulting from a delayed launching of new products in quarter one, Mok said.
The outbreak in European countries and the US in the next few weeks is the key to orders for quarter three but he remained confident towards the group's business.
Mok expected the production of plastic lens would reach 100 million pieces per month before July with a gross profit margin of around 40 percent.
Independent non-executive director, Zhang Hongjiang will be appointed chairman after the conclusion of the annual general meeting on May 15 after the current chairman Koh Boon Hwee's retirement.
Lo Tai On also resigned as company secretary effective today with Jonathan Ho Siu Tak appointed to the post.