Q3 Revenue NT$197.1 Billion, EPS NT$9.04
Delta Electronics reported on the 29th third-quarter revenue of NT$197.1 billion, up 31% year-on-year and 8% quarter-on-quarter, with net profit after tax of NT$23.495 billion, up 26% year-on-year and down 7% quarter-on-quarter, and earnings per share of NT$9.04. Gross profit was NT$67.2 billion, up 28% year-on-year, with gross margin at 34.1%, down 1.5 percentage points from the previous quarter. The company said third-quarter revenue was slightly below expectations, mainly affected by supply chain shortages and delays in data center construction, which made shipments of some products difficult, increased inventories, and recognition of inventory write-down losses also weighed on gross margin.
First Three Quarters EPS NT$26.64, AI Revenue Nearly Half
For the first three quarters, Delta Electronics accumulated revenue of NT$539.7 billion, up 37% year-on-year, with net profit after tax of NT$69.186 billion, up 62% year-on-year, and EPS of NT$26.64. Operating profit for the first three quarters grew 59% year-on-year, with operating margin at 17%. Revenue scale growth drove down the expense ratio, with the operating expense ratio falling from 19.5% in the same period last year to 18.5% in the first three quarters. Chairman and CEO Ping Cheng said this year's main AI-related businesses cover power, thermal, computing and ICT fields, with overall AI-related revenue already close to half of company revenue. CFO Yu Po-wen explained that power solutions accounted for about 25%, while liquid cooling systems posted third-quarter revenue of about NT$25.0 billion, about 13% of total revenue, with the full-year share also estimated at about 13%.
Mixed Divisional Performance, Inventories Awaiting Digestion
By division, third-quarter revenue from the Power and Components division was NT$105.93 billion, up 40% year-on-year, while the Infrastructure division posted revenue of NT$65.88 billion, up 25% year-on-year, with the two remaining the main sources of revenue and profit. The Automation division saw revenue grow 19% year-on-year, boosted by improving industrial and building automation markets and easing shortages, turning from loss to profit in the third quarter. The Transportation division remained in loss, though losses narrowed from the previous quarter. Delta Electronics mentioned about NT$3.9 billion in inventory write-down losses recognized in the third quarter, partly related to volume production and delayed customer pull-in schedules, and Ping Cheng said the related inventories are expected to be gradually digested in the first quarter of next year. The company is also discussing reflecting higher material costs with customers, with some price adjustments possibly implemented in the fourth quarter or the first quarter of next year.
Q4 Revenue Eyes Growth, New Base in Penang
Looking to the fourth quarter, Ping Cheng said revenue will definitely be higher than the third quarter, confirming growth. On gross margin, he said he could not guarantee it, but expected it to be no worse than the third quarter, while reminding that intangible assets will still be reviewed at year-end. Delta Electronics also noted AI and liquid cooling-related businesses are still seen growing next year. Vice President Liu Liang-fu pointed out semiconductor and some passive component capacity expansions take time, and technician shortages could also lengthen data center construction timelines, so revenue growth may not be smooth every quarter. For high-voltage DC, plus/minus 400-volt products already began partial shipments in the third quarter, while 800-volt solutions are still in progress. Delta Electronics' board has approved a large production base in Penang, Malaysia, with a five-year plan targeting capacity on par with its Thailand plant. In addition, solid oxide fuel cells are scheduled for volume production next year, with initial capacity of about 100-plus MW, first for customer trials and validation, with expansion to be evaluated based on progress.