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Goertek's performance was "cut" by Apple

Weak demand in the consumer electronics market and Apple's loss of orders have recently affected Goertek's performance.



On the evening of April 17, Goertek (002241) released its 2022 annual report and 2023 first-quarter report. In the fiscal year 2022, Goertek's operating income was 104.894 billion yuan, a year-on-year increase of 34.10%. The net profit attributable to shareholders of listed companies was 1.749 billion yuan, a year-on-year decrease of 59.08%. The net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 1.627 billion yuan, a year-on-year decrease of 57.54%.


In the first quarter of 2023, Goertek’s operating income was 24.122 billion yuan, a year-on-year increase of 19.94%; the net profit attributable to shareholders of listed companies was 106 million yuan, a decrease of 88.22%.


As of midday on April 18, Goertek shares fell 9.53% to 20.41 yuan.


Gross profit margins of the three major businesses all declined last year


Goertek is a consumer electronics OEM company, mainly providing customers with vertically integrated product solutions of precision components and intelligent hardware, as well as related design, development, and manufacturing services. The company's main business includes precision components business, intelligent acoustic complete machine business, and intelligent hardware business.


Goertek said that in 2022, there were many challenges such as the weak global macro economy, high inflation in European and American countries, and the downturn in the consumer electronics industry, but the company's revenue will still achieve significant growth.


At the same time, in 2022, the gross profit margin of Goertek's three major businesses all declined. Among them, precision components declined by 1.91%, intelligent acoustic complete machines decline by 4.68%, and intelligent hardware declined by 2.77%.


Apple "cuts" Goertek's profits


In addition to the challenges brought by the weak consumer electronics industry to Goertek, as an Apple supply chain company, Goertek’s profit decline last year was mainly affected by loss of orders from Apple.


Goertek disclosed in its annual report that in the fourth quarter of 2022, fluctuations occurred in the production process of a certain new product project of the company's intelligent acoustic complete machine (for details, please refer to the relevant announcements disclosed by the company). After the occurrence of the above incidents, the company's management team actively responded, closely communicated with customers and promoted follow-up solutions, stably improved customer relations, and ensured the normal development of other business cooperation.


Goertek pointed out that the company fully considered the impact of this matter and based on the principle of prudence, increased the provision for the impairment of related assets, which led to a decline in the company's net profit in 2022. In response to the above-mentioned incidents, the company has fully reflected on and learned relevant experiences and lessons, and actively rectified the deficiencies in related work. The company also firmly believes that this incident will not weaken the company's core competitiveness, will not shake the company's business foundation, and will not change the general trend of the company's long-term stable and healthy development.


On the evening of November 8, 2022, Goertek issued a risk reminder announcement stating that the company received a notice from a major overseas customer to suspend the production of one of its smart acoustic complete products. On December 2, 2022, Goertek issued a performance revision announcement stating that based on the current progress, it is expected that this product will not be able to resume normal production and delivery within 2022. Affected by this, the company's operating income this year has decreased by no more than 3.3 billion yuan, and the related direct loss is about 900 million yuan. The company's direct losses and asset impairment losses are about 2 billion to 2.4 billion yuan, which will have a significant impact on the 2022 operating performance. The adjusted net profit attributable to shareholders of listed companies in 2022 is 1.7 billion to 2.14 billion yuan, a year-on-year decrease of 50%-60%.


Relying on Apple's supply chain, it has achieved a series of well-known companies such as Foxconn, Luxshare Precision, and Goertek. Unlike Foxconn and Luxshare Precision, which are still serving Apple wholeheartedly, Goertek seems to want to reduce its dependence on Apple and become a more independent smart hardware company. The rapid growth of Goertek's smart hardware business also shows the company's determination.


Regarding future development, Goertek mentioned that on the basis of consolidating existing competitive advantages, further expanding new business directions and business opportunities, and actively grasping precision optical devices and modules, sensors, microsystem modules, VR virtual reality, and new product opportunities in areas such as AR augmented reality.


 

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