Delta Electronics Pcl New

A very good morning to investors. Thank you for joining in the set of calls for Delta Electronics Thailand this morning. I'd like to introduce our top management who joined the session today. First of all, Mr. Victor Chung, Chief Executive Officer. Secondly, Ms. Mika Ponsiara Thariwong, Chief Financial Officer. And my name is Anjali Thirakam from Investor Relations.

Yeah, good morning.

First, I'd like to start with the executive summary. Delta Thailand delivers strong quarter two 2026 top line revenue at US dollars

2011 million. It's a 50.7% year-over-year growth and 3.4% quarter-over-quarter. Delta's robust operation was supported by world-based strength in power electronics and ICD infrastructure solutions. While AI momentum remains intact, raw material shortage poses a year-term risk, which disrupts shipment and pressure margin for Q226. leading to a record net profit of US dollars 186 million 33.4% year-over-year growth by the naked 35% quarter-over-quarter reduction. Pure political instability continued to put pressure on energy and logistic costs. Headline inflation remained elevated, but broadly stable compared with Q1 2026. While the growing demand in AI-related industry The global economy experienced slower growth in Q2 2026 amid persistent energy market pressure and geopolitical uncertainty, while strong investment in AI-related technologies and infrastructure partly offset these headwinds. Delta Thailand's near-term outlook remained positive, supported by convenient demand and healthy order pipeline for AI and data center research. latest solutions. However, inflationary pressures, geopolitical uncertainty, elevated operating costs, and supply chain constraint remain key challenges. And for the global market outlook, the global economy remains shaped by the Middle East conflict and technological advances. IMF's July 2026 update projects a 3% growth in 2026 with inflation rising to 4.7% before easing to 3.9% in 2027. Strong AI demand to improve the outlook while commodity price volatility and renewal inflation remain key risks. The IMF July update named Thailand amongst the world's top four net export of AI hardware HelloSight Taiwan, South Korea, and Malaysia. Strong AI export and recent fiscal measures are supporting Thai government's broader industrial strategy, which led to the IMF to raise Thailand's 2026 growth forecast to 1.9%. Thailand established the National Semiconductor Board in June of 2026 to produce made-in-Thailand ships by 2050. and to attract Thai thought $2.5 trillion in investment through infrastructure and skill workforce development. The initiative aims to strengthen supply chain in Thailand's position as a leading ASEAN manufacturing hub. According to a BOT May 2026 report on business sentiment index, Thailand's three months July to September business outlook. Improve on stronger expectation for investment, production, and performance. Now for Delta's business outlook for Thailand region. Industrial automation in Q2 2026 revenue-wise increased 23% quarter over quarter and 29% year over year, supported by demand from Thailand and Vietnam. particularly in Thailand's PCB and AI server assembly sectors. Energy infrastructure delivered stable performance quarter over quarter. While first half revenue rose significantly by 121% year over year. Growth was supported by improved project execution and demand for integrated energy solution and enhanced grid resilience and Renewal Energy Integration. Data centers show a strong growth with Q2 2026 revenue rising 79% quarter over quarter. However, revenue remains slightly lower year over year due to a major custom project being postponed to the second half of 2026. The revenue pipeline remains healthy. For India, India's recorded slight revenue growth in Q2 2026 with 2.5% Q over Q and 5% year over year, supported by order wins across key business segments, particularly data center, energy infrastructure, and industrial automation. Key contribution include the data center and telecom infrastructure and solar inverters. Performance remains resilient despite challenges such as pricing pressure, currency volatility, and battery supply constraints. For Sea Recon and Australia New Zealand, Australia business delivers strong performance in Q2 2026 with overall revenue increasing by 144%, quarter over quarter, and 287% year over year. Growth was driven by the ICD business, which record 144% quarter-over-quarter and 301% year-over-year in revenue growth, support by strong demand for AI cooling products, meet the expansion of Australia's data center industry. The energy infrastructure business recorded significant growth of close to 500% Q over Q and 266% year-over-year. driven by demand for micro grid solution and reliable, scalable power infrastructure to support expansion. For European region, industrial and medical recorded growth in Q2 of 2026 with revenue up 9.7%, Q over Q and year over year remaining stable. There were also material supply challenges observed due to AI industry demand Pcl New Pcl New Pcl New Pcl New Pcl New continue to support EV demands, while the development of new onboard power unit for major German OEMs remain on schedule. For some of the award recognition, Delta Electronics Thailand has been included in the S&P Global Sustainability Yearbook 2026 as a Sustainability Yearbook member in the electronic equipment, instrument, and component industry. The recognition is based on its relative performance in S&P Global 2025 Corporate Sustainability Assessment, or CSA score. It marks the company's 11th consecutive year of inclusion in the yearbook since 2016. Delta Electronics Thailand has been recognized in the 2026 Asia Executive Team Survey The company achieved the number one rank in the best IR professional category on a by-side basis in the Thailand country rankings. Delta Electronics Thailand has been included in the Daojong Best in Class Indices. This is formerly known as Daojong Sustainability Index for the fifth consecutive year since 2021. The recognition followed Delta Thailand's continued progress in sustainability, including its net zero greenhouse gas emission target across the value chain by 2050. On the operations side, for Sustainable Development. Delta Electronics Thailand opened the Industrial Automation Training Center on 19 June 2026 to prepare vocational students for careers in future industries and strengthen Thailand's future industrial workforce. Delta signed MOU with Office of the Vocational Education Commissions to strengthen collaboration in Vocational Education and Aligned Skill Development with Industry Needs. Training Center serves as a learning hub for higher vocational certificate students nationwide with hands-on training from Delta experts and exposure to industrial technology early on. Initiative helped align vocational training with industry needs supported a skilled workforce and sustainable industrial development in Thailand. On some of the business aspects, Delta Electronics opened a new R&D center in Lodz, Germany, on May 5th, 2026, to strengthen its localized innovation and product development capability across the region. R&D centers support the development of advanced power solutions for AI and high performance computing data centers, as well as electric mobility applications. Expand the local R&D capability, accelerate product development, strengthen customer collaboration, and support scalable solutions and long-term business growth in the India region. On the production side, Delta Thailand delivered strong production performance in Q2 2026 with production value increasing by 59% year-over-year. Performance was supported by ramp-up Automated Production Lines and Lean Improvement Initiatives, which expand manufacturing capacity and ensure quality excellence. Delta India's production performance in Q2 2026 was slightly below budget. The Rojapur and Gurgaon site maintained healthy performance, outperforming budget by close to 11%, a factorial setting a shortfall at our Krishnagiri site. Financial Highlights

Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New Pcl New The first half of the first half of the first half of the first half of the first half Pcl New

Pcl New Pcl New Pcl New Pcl New Pcl New Pcl Pcl New The first question has three questions. First of all, what is the business outlook for the first quarter of this year in comparison with last quarter and the same quarter of last year? Second portion is about the full year target for 2016 in terms of the revenue. And lastly, what is the pressure that result in our profitability dropping for the second quarter?

We continue to see healthy business pipeline. I mean, the orders for the remainder of the year, especially from AI and data center segments. So I would say on the revenue side, we'll aim for our double digits revenue growth without any issues. That's our first and foremost priority target to make this sales growth. In terms of actual target, we do not disclose those numbers to indicate a trend that is still For the factor that reduce the profit percentage in Q2, the main reason here is that raw material price has started to rise since beginning of the year. We've seen the IC fabrication cost going up and then the DRAM price has gone up substantially. and this trend has percolated to other segments, PCB, power MOSFET, MLCC, some of these precision passive components, metal parts, even chemical raw materials. So because of the demand, a strong demand for AI that sort of have a, how do you say, Effect to Pressure the supply chain for priority to supply to AI and data center the other segments of the Supply becomes tight and therefore created a price Increased pressure and also the conflict in Middle East certainly has increased a raw material price pressure especially petroleum based raw material and its derivatives So these factors add up to our cost pressures and we are working closely with our customer to try to negotiate price increase as well. Typically, we have annual price negotiation with our suppliers and customers. So these will happen in Q4. But we don't see the pressure continually too much in Q3. But for Q4, definitely it's a start of the negotiation cycle, which will see probably some effect more clearly by that time. And the other factor is the inventory provision. Some of our inventory experience some slowdown to our end customer due to various reasons. And because revenue increases quite substantially, any slowdown in customer taking inventory will result in some inventory provisions. But we see that effect should improve in Q3 of this year, or latest beginning of Q4. That's the major reasons.

Business Pipeline Pcl New Pcl New New New New New New New New New New New New New New Pcl New Pcl New Pcl New uh uh Pcl New Pcl New Pcl New uh uh uh uh Could you please be more specific? What are the raw materials that are constrained this and the upcoming quarter?

Yeah, the semiconductor is one of the major items as we face still the strong demand from various customers in short lead time to increase order. So semiconductor is the number one raw material that We are facing a constraint. As a matter of fact, we already see vendors coming to us and demand price increase on some of the MOSFET. We're also affected by a sudden sanction actions from US or from European regions to Chinese suppliers. Last year, we have faced the next barrier issues which is between US, Netherlands and China and this year in April we suddenly faced the sanction of European countries against Chinese semiconductor company Yanti and the order took effect almost immediately which caught us by surprise and then we were constrained to find a second source Quickly in order to make the Sherman and they say it affects some of the AI and data center customer deliveries because we could not use particular type particular dials and semiconductor from Yanji to fulfill deliveries, although the situation has eased toward Q3 now, but this still has lingering effect and the other Item quite obvious right now is PCB. All the PCB raw material are rising so PCB vendors are also coming to their customers to demand price increase or face shortages.

Pcl New Pcl New Pcl New Pcl New Pcl New Please explain on pricing strategy How do you plan to raise price to offset the increased raw material cost? When should we expect the gross profit margin to normalize?

Like I previously said, normally we have annual price negotiation with vendors as well as customers. Because we have already faced some material price increase. So we are discussing with our customers to increase our price to them. This will be probably a lengthy process. Nobody is that easy or willing to a set price increase. So we expect that discussion and activity going all the way to Q4 into our annual price negotiation period with the customer. We do believe that we have very justifiable causes to ask for a price increase. It's just with various customer will take different length of time to achieve that goal.

Pcl New An increase in trade receivables as well as inventory. Any reasons behind this and what would Q3 look like?

Yeah, I think the trade receivables will increase with the increased business level. So that is a normal situation, I would say. We don't see too much of the non-performing receivables. So that's not a risk in itself. But I do admit we have to do a better job to get our receivables back. As for inventory, also, we are preparing for the increase in revenue constantly into Q3 and Q4. So the level of inventory is also seeing a rise, and that's normal to prepare for these increased revenue, as we usually have some buffer time. that we get these materials in-house before we start manufacturing.

As the company is affected by the latest US trade tariffs, and how is the company managing this impact?

The current latest trade tariff is at 12.5% and it's equivalent to most of the country in the regions anyway. So we don't see that as a disadvantage in terms of Thailand's overall competitiveness. And as we have done in the past, most of the tariff costs are shouldered by our customers anyway. So this is not This does not represent much material impact to Delta.

Next one is the effective tax rate.

What will be the numbers going forward for the company? looks like it is trending upwards so what level are we to be looking for?

Okay, just to summarize our CFO response is that you will have to look at our subsidiary within Delta Electronics Thailand. Countries have a different tax jurisdiction that is higher

The next question, please explain factors behind 800 million Thai baht provision in the second quarter of 2026

and uh the reason behind this uh sort of higher provision basically is a slower moving of products through our customers as many of our customer takes on the top arrangement meaning we ship it to uh to the region um predominantly north america uh put them in a store them in a hop and those customers draw the material will start taking the the accounts receivable. In this case the movement was a little slower in Q2 of the past quarter due to a number of reasons. Some customers in itself experienced material constraints. For example DRAM or the TIC for their systems and they could not integrate this full system in time. And also some of the Program was a little bit delayed due to various reasons for deployment. So because of the increased revenue, so the provision for slower moving material as well as some finished products become a little bit higher in the past quarter.

Pcl Pcl New Pcl New Pcl New How far ahead that we are seeing the order visibility and how many The sales revenue has been shifted from the first half to the second half of this year.

Normally, we have visibility of orders provided by a customer's rolling forecast. Typically, they give us an annual umbrella forecast and then a six-month rolling forecast. So our visibility in reality is about six months. But to take the order firm, unchangeable, it varies. varies from customer to customer typically within three months we don't allow customers to change significantly in that period so that's basically the visibility window and what is the portion that carry forward from the first half to the second half that we are expected to fulfill those top four at that percentage i don't have a I cannot answer that right here. Please. Okay.

How long does it take to see the order? Pcl Pcl New As of now, by what percentage does the global minimum tax affect the company's bottom line and net profit margin? And to which country is the tax paid?

Okay. And this country is

How much is the U.S. import tariffs? Has the company recorded and which quarter does it expect to receive the refund?

We have recorded a little over 100 million US dollars of tariff that we pay on behalf of customer. So this number this past tariff will be refunded to Delta and in turn Delta will have to return to customers. So in the next New New New New New New New New New New New New New New New

New New York New York New York Well, R&D expenses is in line with our plan. We expect the R&D expense to be about 3% to 3.5% of our operating revenue.

And right now it's at about 3 to 3.1%. So I will say this part is in control the inline and with our overall longer term strategic numbers.

Last question. Do you expect the next three years? How many Delta Thailand's revenue will be contributing to Delta Taiwan Group? Our revenue is at current level about one third of the overall group revenue.

We expect this number to increase probably slightly over the next few years, but not much, not too much more. Maybe between 30-40% of the overall revenue base for the group.

Thank you very much.