MediaTek Q1 net profit down sequentially but gross margin improves

Taipei, MediaTek Inc., the largest integrated circuit designer in Taiwan, saw its net profit for the first quarter of the year fall more than 16 percent from a quarter earlier due to the slow season effects, but the gross margin climbed on the back of its efforts to improve its product mix.

At an investor conference Tuesday, MediaTek reported NT$3.42 billion (US$111 million) in net profit for the January-March period, down 16.2 percent from a quarter earlier, as its consolidated sales dropped 13.4 percent to NT$52.72 billion in the slow season.

Year-on-year, however, the IC designer's first-quarter net profit rose 34.8 percent, its data showed.

In the first quarter, MediaTek's earnings per share was NT$2.17, down from NT$2.63 in the fourth quarter of last year but up from NT$1.61 a year earlier.

Its gross margin, which reflects the difference between revenue and cost of goods sold, rose by 1.8 percentage points from a quarter earlier to 40.7 percent, the highest since the third quarter of 2015, when it stood at 42.7 percent.

At the investor conference, MediaTek CEO Rick Tsai said chips for smartphones, tablets and other mobile devices accounted for 30-35 percent of the company's total sales, and that segment remained steady.

In the first quarter of the year, end-products using MediaTek's Helio P70 chip were unveiled in the market, which would help push sales of those chips in the second quarter, Tsai said.

In addition, end-products using MediaTek's Helio P90 chip are expected to hit the market in the second quarter, which will boost shipments in the second half of the year, he said.

MediaTek is also expected to benefit from growing sales of chips for computing devices, smart devices, Internet devices, power management solutions and Application Specific Integrated Circuit (ASIC) in the second quarter, Tsai said.

According to MediaTek's estimate, its second-quarter revenue will range between NT$59.6 billion and NT$63.8 billion, a 13-21 percent quarterly increase, while its gross margin is expected to be around 39-42 percent.

Meanwhile, at a board meeting Tuesday, the company proposed a cash dividend of NT$9 per share on its 2018 earnings.

Last year, MediaTek's net profit fell by an annual 14.68 percent to NT$20.76 billion, while its EPS was NT$13.26.

Based on the stock's closing price of NT$295.50 on Tuesday, the company's dividend yield was about 3.04 percent. The local stock market was closed Wednesday, Labor Day.

MediaTek Chairman Tsai Ming-kai and his family, who own about 86.31 million shares in the company, are expected to bag NT$776 million in cash dividends if the payout proposal is approved by shareholders.

The IC designer has decided to maintain its policy of issuing cash dividends once a year, while some other firms, including contract chipmaker Taiwan Semiconductor Manufacturing Co., have decided to spread their cash dividend payouts over the course of a year.

Source: Focus Taiwan News Channel