SHENZHEN -- Nam Tai Electronics swung to a first-quarter net profit of $2 million, up from a loss of $1.1 million in the year ago quarter.

The current results included interest and currency exchange benefits of $1 million and another $900,000 in deferred tax credits.

Net sales rose 104% to $161.9 million for the period ended March 31, the EMS company's best first quarter to date. The operating profit was $244,000, up from a loss of $577,000 last year.

Gross profit was up 26% to $8.2 million, but gross margins fell 310 basis points to 5.1% on product mix, higher labor costs and startup costs related to the contract electronics assembler's Wuxi facility.

The EMS company continues to negotiate with the Chinese government for land in the Guangming Hi-Tech Industrial Park in Shenzhen. It also plans an expansion on 500,000 sq. ft. of raw property in Wuxi.

The impact of Japan's earthquake on first quarter sales revenue was small. However, the company said the aftermath is expected to affect performance through the year, as several of its customers are Japanese. Moreover, key component suppliers suggest an impact of up to 20% of the company's performance, Nam Tai said. "The situation remains unstable and the extent of the damage to the supply chain is still unclear. It is anticipated the situation will be clearer toward the end of June or earlier.

Nam Tai is the world's 21st largest EMS company as ranked by the CIRCUITS ASSEMBLY Top 50.

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