Largan shares up despite large forex losses in Q2

Taipei, July 11 (CNA) Shares of Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., slid early Friday on the local main board but soon recovered, one day after the company reported second-quarter foreign exchange losses of more than NT$4 billion (US$137 million).

Dealers said investors were buying after the negative report, despite market concerns about the impact of a stronger Taiwan dollar on the export-oriented manufacturer.

In addition, investors were optimistic about an increase in orders from Largan's major buyers, including Apple, who are expected to unveil new products in the third quarter, dealers said.

As of 11:59 a.m. Friday, shares of Largan had risen 4.79 percent to NT$2,295.00, after coming off a low of NT$2,115.00 in the first few minutes of the session. The Taiex, the weighted index on the Taiwan Stock Exchange, was up 0.31 percent at 22,762.97 points.

At an investor conference on Thursday, Largan said it incurred NT$4.22 billion in forex losses in the period April to June, as the Taiwan dollar soared 10.97 percent against the U.S. dollar during that quarter.

Due to the large forex losses, Largan said, its second-quarter net profit plunged 84 percent from the first quarter to NT$1.03 billion, with earnings per share of NT$7.73. They were the company's lowest quarterly figures in 13 years. In the first quarter, Largan's EPS was NT$48.28.

Largan Chairman Adam Lin (林恩平) said at the conference that the movement of the Taiwan dollar posed uncertainties for the company's earnings.

Generally, when the local currency rises 10 percent, the company's gross margin falls by 4-5 percent, he said, adding that second-quarter drop was about 2 percentage points due to a stronger Taiwan dollar.

In the second quarter, Largan's gross margin -- the difference between revenue and cost of goods sold -- fell to 53.6 percent, from 54.6 percent in the first quarter.

The company's consolidated sales were NT$11.67 billion, down by a quarterly 20 percent but up 6 percent from a year earlier.

In the first half of the year, Largan's net profit fell 30 percent from a year earlier to NT$7.48 billion, with an EPS of NT$56.01, compared with NT$79.49 a year earlier.

Lin said the company's sales are expected to increase in July and gain momentum in August, as international brands prepare to launch new models in the third quarter. Apple is likely to introduce new iPhones in September.

In 2026, Largan is likely to supply its clients with iris apertures, which command a higher profit margin, for a specification upgrade of their products, he said. This is expected to push up the average selling price (APS) and optimize the company's product portfolio, he added.