Advantech's Booking Performance Strengthens First Quarter and Service-IoT Group will be an Important Future Growth Engine
Advantech (stock code: 2395), a global leader in Industrial IoT, hosted its latest investor’s meeting today. Y2020 revenues in Europe and the United States were impacted by the coronavirus (COVID-19) epidemic and fell to 7% and 2% respectively. The EPS in 2020 was NT$9.40, a slight year-on-year decline of 1.2%. Despite a slight drop in profitability, the gross profit margin increased by 0.9% and operating expenses decreased by 4.3%. However, the overall operating margin continued to increase steadily.
Booking performance stronger and component shortages resolved
Eric Chen, President of General Management commented that, “Y2020 second and third quarter revenues were severely affected by the epidemic, but starting from September last year, sales figures began to pick up. Looking toward the first quarter of 2021, revenue will fall in the range of US$430 to US$450 million dollars and the operating margin will be between 16% and 18%.”
Miller Chang, President of Embedded-IoT Group at Advantech pointed out that, “Advantech's booking performance started to pick up in the last quarter of last year, and leading shipments of 20% were achieved. Especially in January and February this year, the sales figure continued to increase. Coupled with shortened lead times, the book-to-bill ratio (B/B ratio) increased to 1.52 and the annual booking growth rate of Q1 is expected to reach 50%. However, due to component shortages and long lead times, an estimated 5-10% impact in the second quarter Y2020 is expected. Advantech has initiated corresponding measures to cope with the impact. For example, in the procurement department, to fulfill demands of orders over the next twelve months, we have requested suppliers to reserve production capacity and have sufficient components to meet urgent cases. What’s more, short-term alternative component procurements have been introduced so that the product department can implement alternatives and quickly send out new samples for customers’ approval. The sales department have confirmed mid-term and long-term orders with the customer for the next twelve months and allowed us to initiate the stock preparation process.”
Service-IoT Group becomes an important driver for
Advantech’s future growth
MC Chiang, Vice President of Service-IoT Group of Advantech said that, “With the maturity of applications in industrial IoT, The IoT service business unit has slowly become an important engine for Advantech's growth. Since last year, its revenue growth rate has reached 15%, which is higher than the average of all other business units. In terms of long-term development, an internal system integration team called Advantech iCity Services (AiCS), will be established to recruit industry-focused operation team members internally and externally. The team will have a shared R&D platform, business and marketing resources, and a system integration team to quickly integrate and implement exclusive solutions across a variety of industries.”
MC Chiang further pointed out that AiCS organization plans work with eco partner from different industry to be an integrated services company and provide one-stop services in Greater China. In the global market, it will act as a solution provider and export services to local partners through a franchise model to accelerate the development of the AIoT ecosystem.