Awea most profitable machine-tool manufacturer in Taiwan

Taipei, Aug. 31, 2005 (CENS)--Due to the price hike in raw materials and the fluctuations of foreign exchange rates, Taiwan's makers of machine tools saw their earnings fail to meet expectations in the first half of this year.

Bolstered by the substantial growth in exports, Taiwan's machine-tool industry saw outstanding performance in production and orders received last year. Overall production value of the industry amounted to NT$95 billion (US$2.96 billion at US$1:NT$32) last year, representing an annual growth of 30% with exports reaching NT$75.2 billion (US$2.35 billion).

Despite the outstanding performance last year, the industry seemed to encountered a slowdown in overall performance in the first half this year, because of the price hike in such raw materials as iron and steel and the appreciation of the New Taiwan dollar against the U.S. greenback.

Of domestic machine-tool manufacturers, Awea Mechantronic Co., Ltd., focusing on the production of large-sized double-column machining centers, performed the best in the first half. Awea said it garnered NT$3.16 in after-tax earnings per share on sales of NT$1.314 billion (US$41.06 million) in the first half. The company predicted it would grab NT$2.96 (US$0.09) in after-tax EPS on sales of NT$1.446 billion (US$45.18 million) in the second half.

With a conservative attitude toward the firm's second-half performance, Awea president Edward Yang said the skyrocketed price in crude oil, the price hike in raw materials and the vibration of foreign exchange would slash the investment willingness of manufacturing firms, which will indirectly affect domestic machine-tool manufacturers in taking orders. He predicted the industry wouldn't recover until the fourth quarter of this year.

Tong-Tai Machine & Tool Co., Ltd., another large-sized manufacturer of machine tools, said it had cumulative sales of NT$2.028 billion (US$63.37 million) in sales in the first half of this year, up a mere 1.61% year-on-year. Affected by the price hike in raw materials, the company grabbed NT$261 million (US$8.15 million) in pretax earnings, or NT$2.26 (US$0.07) in EPS, in the first half of this year, down 18.99% annually.

Tong-Tai saw sales and pretax earnings garnered in the first half reach 42.2% and 35.2% of this year's projected total sales of NT$4.8 billion (US$150 million) and pretax earnings of NT$741 million (US$23.15 million), respectively. But the company believed it would be able to meet the projected financial goal for the entire year because it still left NT$1.4 billion (US$43.75 million) worth of orders unfilled at the end of July.

Also affected by the price rise in raw materials, Falcon Machine Tools Co., Ltd., one of Taiwan's leading manufacturers of grinding machines, saw gross margin slid to 17.8% in the first half of this year from 23.62% posted in the corresponding period of last year. The company said it posted NT$28.49 million in pretax earnings, or NT$0.05 (US$0.001) in EPS, in the first half, down 23.6% year-on-year.

Roundtop Machinery Industries Co., Ltd., which concentrates on machining centers and CNC (computerized numerically controlled) lathes, noted it scored NT$645 million (US$20.15 million) and NT$84.25 million (US$2.63 million) in sales and pretax earnings, respectively, in the first half of this year. The company saw after-tax EPS reach NT$0.96 (US$0.03) in the first half of this year, up 57% from NT$0.61 (US$0.019) posted in the same period of last year.

Kao Fong Machinery Co., Ltd., focusing on the production of machining centers and CNC drilling and tapping machines, saw first-half sales plunge 37% annually to NT$427 million (US$13.34 million).

An industry analyst said the industry would be able to regain momentum in the second half because some disadvantageous factors affecting the performance of domestic manufacturers in this line are gradually phasing out.