Largan reports over 74% increase in net profit in Q4

Taipei, Jan. 10 (CNA) Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., on Thursday reported a more than 74 percent year-on-year increase in net profit for the fourth quarter of last year.

Largan's fourth quarter net profit stood at NT$8.68 billion (US$263 million), a new quarterly high, up 74.5 percent from a year earlier and up 30.8 percent from a quarter earlier, with earnings per share at NT$65.01.

In addition, the company's fourth quarter gross margin -- the difference between revenue and cost of goods sold -- rose from 50.21 percent in the third quarter to 59.14 percent, the highest level in more than three years.

At Thursday's investor conference, Largan Chairman Adam Lin (林恩平) said the better bottom line and gross margin largely reflect an improving product portfolio and better yield rates.

The decision by its major clients to give Largan performance bonuses for achieving shipment goals also enabled the company to make higher profits, he added.

Meanwhile, a weaker Taiwan dollar against the U.S. dollar helped Largan report a better bottom line in the fourth quarter, Lin said.

According to Largan, in the fourth quarter, the company's 20 mega-pixel lenses and higher -- which have a higher profit margin -- accounted for 20-30 percent of total sales, with 10-20 mega-pixel lenses making up 60-70 percent, 8 mega-pixel lenses representing less than 10 percent, and other product items accounting for 10-20 percent.

In 2024, Largan posted NT$25.92 billion in net profit, up 45 percent from a year earlier with its EPS at NT$194.17, the second highest ever quarterly level, behind NT$210.7 recorded in 2019.

With market speculation suggesting that Apple and Samsung Electronics Co. will introduce ultra-slim smartphones, Lin said that the camera lenses used in these models require the advanced production technologies developed by Largan.

However, Lin added that he is uncertain whether these sophisticated camera lenses will enter mass production this year or next.

Samsung is also one of Largan's major clients.

In addition to smartphone camera lenses, Lin said, Largan has entered the development of lenses for humanoid robot production with its products having been certified by some of its clients for night vision functions and as crashproof.

Looking ahead to the first quarter, Lin said Largan's shipment momentum was expected to improve compared to the same period last year as clients continue to place orders. However, he anticipated that the company's first-quarter gross margin would fall short of the fourth-quarter level despite the sustained momentum.

After the investor conference, a U.S.-based brokerage forecast Largan will post an EPS of NT$218 and NT$235 for 2025 and 2026, respectively, and gave a target price of NT$3,485 for Largan shares and a buy recommendation for the stock.

On Friday, Largan shares rose 5.97 percent to close at NT$2,750.00 on the Taiwan Stock Exchange, outperforming the Taiex, the weighted index on the main board, which fell 0.30 percent.