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Electronics Production | February 13, 2012

Nam Tai blames losses on wage inflation

The company pointed to wage inflation costs in China as well as costs at their Wuxi factory for their gross profit margin decrease.
Nam Tai Electronics showed a fourth-quarter net loss of $5.61 US million compared with a profit of $5.28 million last year. Net sales in the fourth quarter of 2011 were $145.3 million, down 12.7% from net sales of $166.5 million in the same quarter of 2010.

Gross profit of $2.3 million in the fourth quarter of 2011 decreased by 83.8% from $14.2 million in the same quarter last year.

Gross profit margin in the fourth quarter of 2011 decreased to 1.6%, down from 8.5% in the fourth quarter of 2010.

The company blamed gross profit margin decrease on the discontinued production of box-built products with higher gross margin, such as Bluetooth headset and calculators, labor costs continues to increase due to year on year wage inflation in China and startup costs and operating losses at the Company's facility in Wuxi facility. The Wuxi facility was completed in 2009 and began manufacturing and assembling flexible printed circuit boards in 2010, however mass production will not begin until March 2012.

The company said in a statement that they paid out $2.7 million in lay-off costs for employee severance benefits following a labor strike of approximately 1,200 employees in early December 2011.

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