Johnson Electric Holdings is painting a brighter picture for its performance in the coming year, saying that over-capacity provided in the past year will be fully used soon and that raw material costs are set to stabilise. Chairman and chief executive Patrick Wang Shui-chung expects a 5 per cent growth in global demand for micro-motors. Growth in demand in Southeast Asian countries will be especially fast in areas including motor vehicle components, business equipments and power tools because of the fast-growing economies there. The world's second-largest micro-motor manufacturer recorded a 18.7 per cent slump in attributable profit to $275.1 million for the year ended March this year due to a decline in sales to the home appliances and personal-care appliances sector, reducing the demand for micro-motors. The group has been investing heavily during the past two years in its major production facilities in the Shajin district of Shenzhen and also in Thailand, bringing its manufacturing capacity to more than one million micro-motors a day. However, a decline in sales of electrical applicants, combined with a temporary shortage of labour in February and March this year, led to a significant fall in output at the Shajin plant. Mr Wang said output had now recovered to 850,000 units a day. During the past year prices of copper and steel, major components of micro-motors, were highly unsettled due to speculative trading in the commodity futures market. Johnson Electric built a substantial inventory of copper at relatively high prices. As a result, the group was less able to take advantage of declining copper prices since the Sumitomo Corp losses. Mr Wang said the group's inventory of higher-priced copper would not be used up until the end of this year. Johnson Electric would continue to implement a capital expansion plan this year, replacing obsolete equipment. The group invested $500 million in capital expansion last year. Chief financial officer Paul Tong Hon-tao said the group at the moment had cash in hand amounting to $1.6 billion.
