Taiwan Ratings statement|
BenQ had an operating loss of $26.12 million in the second quarter, compared to an operating income of $2.04 million in the first quarter. The operating loss resulted mainly from a US$15-US$20 million write-off in the US market for unsold products, according to a report from Bloomberg. Taiwan Ratings, a partner of Standard & Poor's, said its 'twA' long-term and 'twA-2' short-term corporate credit ratings on BenQ Corp (2352.TW) will not be immediately affected by the company's weak operating performance in the second quarter to June. The ratings on BenQ may be lowered if the company fails to improve its profitability over the next few quarters or if it encounters difficulties in managing the integration of Siemens AG's loss-making mobile phone unit, Taiwan Ratings said in a statement.
The company had consolidated revenues of $2.75 billion in the first half of 2005 with a net income of $32 million. Handset business contributed 8% to the company's revenues last quarter, 3pp (percentage points) down from the first quarter, BenQ president, Sheaffer Lee said. In addition, shipments of handsets dropped 10% sequentially. The company retains a conservative outlook for handset shipments this quarter, Lee added. In Australia BenQ were expected to launch mobile phones last quarter in a deal with Telstra but to date this has not happened. However, BenQ expects the proportion of sales coming from the handset sectors to grow dramatically to 55-65% of its total sales in 2006, up from 8% currently, as its acquisition of Siemens handset unit will become effective October 1 of this year, KY Lee, BenQ's chairman and CEO stated.
BenQ Projectors Sales
Projector shipments also dropped in the second quarter and BenQ saw declining results from its digital media business, which accounted for 13% of revenues last quarter, down from 15% in the first quarter. Earlier this month, BenQ lowered its 2005 forecast for projector shipments to 500,000 units, down from an original goal of 700,000 units. After merging with Siemens, BenQ will consolidate its previous three business groups and two strategic business groups into three groups, namely computing, communication and consumer electronics, Lee added.