Darfon's Q2 Earnings Reach NT$86.24 Million, Both Sequential and Year-on-Year Growth, EPS NT$0.31, Margin Pressure from Rising Material Costs

Computer peripherals manufacturer Darfon (8163-TW) held its earnings conference today (4th) and simultaneously released its second-quarter financial report. Darfon earned NT$86.24 million in Q2, showing both sequential and year-on-year growth, with earnings per share (EPS) of NT$0.31. Darfon's CFO Lin Feng-Cheng stated that a strong recovery in European green energy distribution channels drove Q2 performance. However, rising raw material costs impacted passive components MLCC and green energy OEM operations, leading to margin compression.

Darfon's Q2 revenue reached NT$7.52 billion, up 24.8% sequentially and 8.9% year-on-year. Gross margin was 16.6%, down 1.4 percentage points sequentially but up 0.5 percentage points year-on-year. Operating profit was NT$150 million, up 87.9% sequentially and 17.1% year-on-year. Operating margin was 2.0%, up 0.7 percentage points sequentially and 0.2 percentage points year-on-year. Net profit after tax was NT$86.24 million, up 51.6% sequentially and 41.0% year-on-year, with EPS of NT$0.31.

For the first half of the year, Darfon's cumulative revenue reached NT$13.54 billion, up 9.3% year-on-year. Gross margin was 17.2%, up 0.3 percentage points year-on-year. Operating profit was NT$230 million, up 42.8% year-on-year. Operating margin was 1.7%, up 0.4 percentage points year-on-year. Net profit after tax was NT$140 million, up 19.0% year-on-year, with EPS of NT$0.51.

Regarding Q2 financial figures, Lin Feng-Cheng explained that demand for electric-assist bicycles (E-bikes) drove green energy product revenue share to 45% in Q2, surpassing IT peripherals at 43% and becoming the company's primary revenue source. Integrated component products also showed steady growth, with revenue increasing over 10% in both the quarter and first half, accounting for approximately 12% of total Q2 revenue.

Lin noted that Q2 gross margin slightly declined to 16.6%, primarily due to rising costs of precious metals like aluminum and silver affecting passive components MLCC and green energy OEM operations. Additionally, changes in product mix within the green energy distribution channel, particularly in high-revenue segments, had a minor impact on margins. However, overall margins remained within a reasonable range.

Regarding capital expenditures, Lin stated that H1 capital spending was approximately NT$500 million, with 70% allocated to production equipment and automation upgrades, and 30% to the expansion of subsidiary Taiyu Technology's new factory in southern Vietnam. Additionally, the company paid NT$380 million to acquire Haichang Company during H1, demonstrating a strategic move to optimize capacity and enhance long-term operational momentum.