SHENZHEN – Nam Tai Electronics reported third-quarter net income fell 86% year-over-year to $1.1 million on a change in the electronics manufacturing company’s focus to lower margin products.

For the period ended Sept. 30, net sales fell 15.6% from 2010. Gross profit decreased 54.6% to $8.1 million, and gross profit margin fell to 5.5%, down from 10.2% on changes in product mix, increased labor costs, and startup costs and operating losses at the company's facility in Wuxi. Operating income was $100,000 in the quarter, down from $7.3 million in 2010.

Year to date net sales are up 24.2% to $457 million. Gross profit margin is down 550 basis points to 5.6%. Net income slipped $3.3 million to $6.1 million.

The EMS company continues its site-expansion projects in Shenzhen and Wuxi. A planned expansion in the Guangming Hi-Tech Industrial Park in Shenzhen, has been held up by local government officials for four years, with no resolution in sight. The Wuxi expansion, which is supported by local government, has been delayed to conform with recently identified zoning and environmental regulations.

The contract assembler is lessening its dependence of consumer end-products in favor of telecommunications subassemblies, including LCD module manufacturing for devices such as smartphones and tablets. Ongoing negotiations have potential to more than double the company's 2012 sales revenue from 2011 revenue levels, Nam Tai said.

Nam Tai is a Top 25 global EMS company, according to the CIRCUITS ASSEMBLY Top 50.

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