Johnson Electric sales down as demand weakens

Component manufacturer's sales decline 4pc, but firm still posts record profit of US$191m

PUBLISHED : Friday, 17 May, 2013, 12:00am
UPDATED : Friday, 17 May, 2013, 4:06am

Johnson Electric posted a 4 per cent fall in total sales, which the electronic component manufacturer blamed on weaker demand and currency movements.

The company's sales declined to US$2.06 billion year on year for the 12 months up to March 31, while net profit rose 2.5 per cent to a record US$191 million.

Johnson attributed the fall in sales to a number of factors, including weaker demand from industrial customers and the effects of foreign exchange rate movements during the period.

It said the weakening of the euro against the US dollar adversely hit sales by US$49 million.

"For this year, I remain cautiously optimistic," said chairman and chief executive Patrick Wang Shui-chung. "We will launch many new products in Europe. And in the US, the economy is stepping out of the lowest point.

"However, visibility on overall demand beyond the first quarter is low."

He said that in such circumstances Johnson will remain focused on investing in innovative technology, improving product quality and continuing to develop a global manufacturing footprint.

The company said that in the United States the automotive market has been continuing on its path to recovery, with consumers more confident about replacing ageing vehicles in a gradually improving economy.

Sales in the Americas market rose 2 per cent last year, "in line with economic growth in general", according to Jeffrey Obermayer, senior vice-president and chief financial officer.

In Asia, sales went down by 1 per cent, while in Europe, which is the company's largest market, sales grew 1 per cent despite its continuing recession, Obermayer said.

Sales of automotive products increased 2 per cent year on year to US$1.3 billion, or about two-thirds of the company's total sales.

Its industry products, however, suffered a 9 per cent drop in sales to US$686 million on subdued economic conditions and poor consumer sentiment in many end markets in Europe and North America.

The company also said that workers' rising salary levels in mainland China have been a strong headwind. To cope, Johnson has made efforts to redesign assembly processes and increase the levels of automation in operations.

A final dividend of eight HK cents per share is suggested.

Shares of the company remained flat on Thursday, closing at HK$5.30. The benchmark Hang Seng Index went up 0.2 per cent.