Ritek, citing gigantic exchange rate-linked charges and tighter margins in compact discs, said it will post a loss instead of a profit this year. The world’s largest CD-R disc maker said it now expects a net loss of NT$3.25 billion, or NT$1.72 a share, on sales of NT$20.32 billion. That compared with a net profit of NT$2.08 billion and sales of NT$26.31 billion announced earlier in April.
The news pushed Ritek’s stock down by the daily limit for most of the session, leaving it down NT$1.3, or 6.95%, at NT$17.4 at the close of trading.
The company blamed the profit shortfall mainly on NT$1 billion in currency exposure due to the sharp rise of NT dollar against the US dollar in the second quarter. Also eroding its profit base, Ritek said, were higher costs of plastic material used in discs, which doubled in the first half amid oil supply concerns raised by refreshed Middle East tension.
Investment losses also hurt as Ritek has lost between NT$200 and NT$300 million from two affiliates that make opto-electronic and fiber-optic components this year.
The company is facing challenges unseen for years. In a sector plagued with oversupply, Ritek was forced to hold back on plans to raise disc prices, fearing that customers would revolt and turn to competitors. The second half also has failed to deliver a widely anticipated recovery, as the global economy remains on a weak footing and slows demand for its optical discs.
Ritek’s official second-quarter and interim results are scheduled for release next week.