Ase Technology Holding ((ASX)) has held its Q3 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, ASE Technology Holding presented a mixed sentiment with notable achievements and challenges. The company showcased strong revenue growth, particularly in its ATM and test business segments, and improvements in profit margins. However, the impact of foreign exchange fluctuations and rising operating expenses posed significant challenges. Despite these hurdles, the overall sentiment was positive, driven by robust performance in key business areas.
Revenue Growth
ASE Technology Holding reported consolidated net revenues of TWD 168.6 billion, marking a 12% sequential increase and a 5% rise year-over-year. In U.S. dollar terms, sales surged by 17% sequentially and 14% annually, highlighting the company’s strong revenue growth.
ATM Business Record Revenue
The ATM business segment achieved record revenues of TWD 100.3 billion, reflecting an 8% sequential growth and a 17% annual increase. On a U.S. dollar basis, ATM revenues climbed 13% sequentially and 27% annually, underscoring the segment’s robust performance.
Test Business Outperformance
The test business continued to outpace the assembly business, with growth rates of 11% sequentially and 30% annually. This outperformance highlights the test segment’s significant contribution to the company’s overall success.
Improved Profit Margins
Operating margins improved to 7.8%, up by 1 percentage point sequentially and 0.6 percentage points year-over-year. This improvement indicates the company’s effective cost management strategies.
Gross Margin Improvement
Gross margins saw a modest improvement, increasing by 0.1 percentage points sequentially and 0.6 percentage points year-over-year, reflecting the company’s focus on enhancing profitability.
Foreign Exchange Impact
The appreciation of the NT dollar by 4.6% against the U.S. dollar negatively impacted margins by 1.4 and 2.1 percentage points at the holding company and ATM levels, respectively, posing a challenge to the company’s financial performance.
EMS Business Revenue Decline
EMS business revenues increased by 17% sequentially but experienced an 8% decline year-over-year, indicating a mixed performance in this segment.
Increased Operating Expenses
Operating expenses rose by TWD 0.2 billion sequentially and TWD 0.7 billion annually to TWD 15.7 billion, primarily due to higher R&D costs, impacting the company’s overall profitability.
Forward-Looking Guidance
Looking ahead, ASE Technology Holdings anticipates a stable NT dollar environment with a projected exchange rate of TWD 30.4 per U.S. dollar for the fourth quarter. The company expects consolidated revenue growth of 1% to 2% quarter-over-quarter and an increase of 70 to 100 basis points in gross and operating margins, despite the challenges posed by foreign exchange impacts.
In summary, ASE Technology Holding’s earnings call reflected a generally positive sentiment, driven by strong performances in key business segments such as ATM and test businesses. While foreign exchange impacts and rising operating expenses presented challenges, the company’s forward-looking guidance suggests continued growth and profitability improvements.