Johnson Electric profit hits US$187m
Electronic component manufacturer Johnson Electric reported a 2.7 per cent increase in net profit to a record US$187 million in the financial year to March 31.
Sales grew modestly by 2 per cent to US$2.14 billion. However, sales of the company's automotive products rose 11 per cent from the previous year to US$1.27 billion.
'The near-term prospects for demand are difficult to predict given the macroeconomic and political uncertainties that exist in most of the key geographies where we operate,' chairman and chief executive Patrick Wang Shui-chung said.
He said although the operating environment for global manufacturing businesses might continue to be challenging, the fundamental trend in the car industry was in the company's favour.
That was because 'the market needs devices to increase mileage and reduce emissions, and our products are strong in that respect'.
Wang said new products and innovative ideas made him optimistic about Johnson Electric's long-term prospects, while for this year he was 'cautiously optimistic'.
Most of the company's plants are on the mainland, where labour rates have increased noticeably over the past couple of years. Johnson Electric said labour costs in the Pearl River Delta generally rose more than 20 per cent last year, but by improving operating efficiency it kept the growth in its own costs at 10 per cent.
The company's sales in the Americas, one of its three main markets, rose 9 per cent to US$483 million.
In Europe, the firm's sales rose by 10 per cent to US$927 million.
However, in Asia, sales dropped 2 per cent to US$723 million.
'That is because the inflation in material costs is very high. So the customers decided not to continue with some of our products, while others we decided to discontinue as the margins subsided,' Wang said.