Advantech (2395) Q2 2024 earnings summary

Executive summary

• 2Q24 and 1H24 saw single-digit quarter-over-quarter growth in both revenue and net income, but double-digit year-over-year declines, with consolidated operating revenue for 1H24 at NT$28.52 billion (down 17% YoY) and net profit after tax at NT$4.11 billion (down 31% YoY).

• Operating profit margin improved slightly sequentially but was lower year-over-year due to a reduced revenue base.

• Taiwan market grew 12% YoY, while other regions and all business units posted double-digit declines year-over-year.

• Non-operating income included a one-time gain from the disposal of Donghu Manufacture Center.

• Declines attributed to geopolitical issues and high inflation, leading to global demand slowdown.

Financial highlights

• 2Q24 net sales: NT$14,644mn, up 6% QoQ, down 14% YoY; 1H24 net sales: NT$28,523mn, down 17% YoY.

• 2Q24 gross profit: NT$5,931mn (40.5% margin); 1H24 gross profit: NT$11,479mn (40.2% margin).

• 2Q24 operating profit: NT$2,166mn (14.8% margin), up 13% QoQ, down 37% YoY; 1H24 operating profit: NT$4,080mn (14.3% margin).

• 2Q24 net income: NT$2,113mn (14.4% margin), up 6% QoQ, down 30% YoY; 1H24 net income: NT$4,107mn, down 31% YoY.

• 2Q24 EPS: NT$2.46; 1H24 EPS: NT$4.78.

Outlook and guidance

• 3Q24 consolidated revenue expected at US$450M–470M.

• Gross margin guidance: 39.0%–41.0%; operating margin: 14.0%–16.0%.

• Management notes a gradual resurgence in operational performance, with sequential improvement in Q2.

• Ongoing challenges from global geopolitical tensions and inflation are expected to continue impacting demand.