Tsann Kuen ties up with Haier to tap microwave-oven market

Taipei, Aug. 31, 2004 (CENS)--Tsann Kuen Enterprise Co., Ltd., one of Taiwan's leading 3C (computer, communications, consumer electronics) distributors and manufacturers, has resolved to cooperate with Haier Group, mainland China's leading manufacturer of consumer electronics to jointly tap the global microwave-oven market.

According the agreement between the two companies, Tsann Kuen will manufacture the microwave ovens bearing the Haier brand at its Zhangzhou plant in the mainland. Tsann Kuen said it would adopt the steel materials produced by China's Bao Steel and the magnetic control tubes supplied by Japan's Matsushita for the production of microwave ovens. The U.S.-based leading retailer WalMart has promised to procure the microwave ovens produced by Tsann Kuen.

Tsann Kuen Chairman T.K. Wu noted his company achieved outstanding performance in the first half of this year, posting NT$789 million (US$23.13 million at US$1:NT$34.1) in pretax earnings, NT$3.57 (US$0.1) in pretax earnings per share, NT$631 million (US$18.5 million) in after-tax earnings, and NT$2.86 (US$0.08) in net EPS.

Wu notes his company saw after-tax earnings grow by 23.39% annually in the first half of this year. Total sales reached NT$15 billion (US$439 million) in the first half of this year. The company garnered NT$1.38 (US$0.04) and NT$1.51 (US$0.04) in after-tax EPS in the first quarter and the second quarter of this year, respectively.

Although Tsann Kuen's mainland operation remains in the red, Wu said it wouldn't affect the profitability of the entire group. He said at present his company's profits mainly come from the 3C distribution channels and the sales of small home appliances in Taiwan, which can cover the mainland losses. He argued the mainland operations will become profitable no later than October next year.

Tsann Kuen noted it would be able to make profits in Japan after 14 years of operations there. The company boasted it has acquired OEM (original equipment manufacturer) orders of small home appliances from Japan's Sanyo, Sharp, Zojirushi, and Toshiba, and the OEM orders of the same products placed by domestic brands of Sampo, Teco Electric & Machinery and Kolin so far this year.

Since its establishment, Tsann Kuen has recorded an average annual sales growth of 30%. The company boasted an even higher growth of 53.91% annually in the first half of this year.

Tsann Kuen stated its sales growth this year will be mainly contributed by the 3C distribution channels in Taiwan. Originally the company estimated the number of its domestic 3C distribution outlets would hit 150 by the end of this year. But the number has reached 148 in mid-August. Accordingly, the company recently raised the goal of opening new outlets this year. With the goal adjustment, the company would see the number of domestic distribution outlets reach 160 and that of mainland will grow to 70 from 51 by the end of this year.