Asus quarterly report: “We've already bottomed out”

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83 percent less profit, but Asus is still positive about the future. Because according to the group, things are already looking up again for him, the massive correction at the end of the second quarter is said to have already marked the bottom. Asus expects growth of up to 20 percent for the PC business.

However, the emphasis in the statements is on the phrase that it is always about information about your own group. Because even Asus sees the market as still difficult, overall it is also declining. Asus emphasizes that only its own stand with well-known brands helps the company to act above many other manufacturers. The company was able to set itself apart from the market throughout the first half of the year and even survive the weak second quarter with a black eye – sales fell by only four percent – but expects deliveries to increase again in the third quarter, especially for PCs. And not only compared to the second quarter, but also compared to the previous year, Asus explained in the conference call on the quarterly figures.

Review and outlook from Asus (Image: Asus)
Outlook from Asus (Picture: Asus)

An insight to inventory

The details of the quarterly report show where the money was last. You can always read about high inventory levels, and Asus also provides this information in detail. Within a year, the value of the inventory increased by 59 percent, Asus literally has goods worth 206 billion New Taiwan dollars, the equivalent of around 6.9 billion US dollars, “in stock”. The so-called days of inventory increased from 114 days in the same period of the previous year to 180 days.

Exactly this circumstance is likely to be reflected in Asus' orders from other companies such as Intel, AMD and Nvidia as well as DRAM and NAND manufacturers and many other suppliers. With warehouses so full, less is now needed and ordered, inventories have to be reduced – one of Asus' major goals for the second half of 2022. Analysts had recently estimated that the still high production level, for example for DRAM chips, would also contribute to this will lead to prices falling, as customers will not buy as much due to high inventories.

By the end of the year, Asus plans to reduce inventory by at least 50 billion New Taiwan dollars. About half of the current inventory is high-priced components, such as CPUs, GPUs and memory, Asus explained. For example, with the upcoming Intel platform on the horizon, Asus expects that 80 to 90 percent of other components can continue to be used there. Interestingly, even for graphics cards, Asus expects increased shipments compared to 2021 and more sales (but less profit), a significantly different statement than the one recently made by Nvidia.

But Asus also sees that it will take a few quarters to adjust – and that will have an impact on the margin. The second quarter is said to have been the worst and things are set to pick up from now on, but slowly as too many uncertainties dominate the market.