Darfon Electronics (8163) Q2 2024 earnings summary

Executive summary

• 2Q24 net sales reached NT$5,198 million, up 1.7% sequentially but down 24.5% year-over-year, reflecting recovery in the PC/NB industry but ongoing bike inventory adjustments.

• Revenue for the six months ended June 30, 2024 was NT$10,309 million, down from NT$12,889 million year-over-year, with declines in both intelligent and green energy product sales.

• Net income for 2Q24 was NT$160 million, a 2.4% decrease sequentially and a 49.6% drop year-over-year; net income for the six months was NT$324 million, down from NT$539 million in the prior year.

• Maintained high gross profit margin at 18.6% in 2Q24 and 19% for the six months.

• The review report was qualified due to certain subsidiaries' financials not being reviewed by independent auditors, representing 26.91% of total assets as of June 30, 2024.

Financial highlights

• Gross profit for 2Q24 was NT$967 million, down 1.1% sequentially and 19.9% year-over-year; gross margin for the six months was 19%, unchanged year-over-year.

• Operating income for 2Q24 was NT$191 million, down 8.3% sequentially and 45.4% year-over-year; operating income for the six months was NT$399 million, down from NT$665 million year-over-year.

• Basic EPS for 2Q24 was NT$0.62, compared to NT$0.52 in 1Q24 and NT$0.82 in 2Q23; basic EPS for the six months was NT$1.14, compared to NT$1.33 in the prior year.

• Free cash flow for IH24 was NT$984 million, a significant increase from NT$31 million in IH23.

• Net cash provided by operating activities was NT$1,479 million for the six months, up from NT$1,212 million year-over-year.

Outlook and guidance

• Revenue supported by PC/NB industry recovery, but bike segment faces inventory adjustments.

• The company is expanding its European e-mobility presence through the acquisition of Grofa Action Sports GmbH, with the transaction set for October 2024.

• Focus on strengthening operating and free cash flow for sustainable growth.