Sars outbreak helps Legend boost sales
First-quarter profit at the mainland's top computer manufacturer rose 3.8 per cent as the Sars epidemic forced consumers to search for ways to pass away the hours at home.
Legend Group's net profit rose to HK$278.25 million for the three months to June 30, up from $267.91 million a year ago. The result was slightly lower than the $289.25 million average profit expectation of four research houses. Turnover rose by 11.3 per cent to $5.34 billion.
Earnings from consumer products leapt 35.1 per cent to $154.68 million, while profits from the corporate segment climbed 8.4 per cent to $177.71 million.
Legend's handheld devices, IT services and contract manufacturing operations all recorded first-quarter losses.
'The Sars outbreak helped consumers to understand that computers, just like televisions, are a necessity at home,' president and chief executive Yang Yuanqing said. 'During the epidemic, consumers preferred to choose computer products with highly reputable brand names.'
According to International Data Corp, mainland computer shipments rose 14 per cent to 2.9 million units in the three months to June, compared with 12.7 per cent growth in Asia, excluding Japan.
Legend said its first-quarter PC shipments grew 21.6 per cent from the same period last year.
Turnover from handheld devices - mainly mobile phones - was up 53.6 per cent to $401 million, helped by the launch of new models. But the segment recorded a $24.25 million loss compared with a $4.17 million profit a year earlier.
Mary Ma, senior vice-president and chief financial officer, said Legend had cut handset prices to compete with rivals such as TCL and Ningbo Bird.
Gross margin for handheld devices fell from 16.6 per cent to 11.7 per cent, while average handset prices dropped from $1,600 to $1,300.
The company told analysts yesterday it had sold about 30 million handsets in the first quarter and was keeping its full-year sales target of 1.5 million to two million units.
DBS Vickers Securities analyst Joseph Ho said: 'If Legend had not made a loss in its handset business, it would have posted double-digit growth.'
