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Chairman's Statement
 
 
 
Dear Shareholders,

In 2019, the world economy remained affected by the US-China trade war and overall market demand declined, which caused economic uncertainties and weakened overall investor confidence. Despite difficulties and challenges in the business environment, Delta achieved growth in terms of annual revenue and gross profit, thanks to all of Delta's team members' collective efforts. Delta's consolidated revenue in 2019 was NT$268.1 billion, a 13% increase from the previous year; gross profit was NT$74.5 billion; and gross profit margin was 27.8%, 17% higher than the previous year. The net operating profit was NT$19.4 billion, with a net operating profit margin of 7.2% that increased by 7% compared to the previous year. Net income after tax was NT$23.1 billion, with a net after-tax profit margin of 8.6%, which showed an increase of 27% compared to the previous year. In 2019, Delta's earnings per share (EPS) was NT$8.90, and return on equity (ROE) ratio was 17.10%.

In order to strengthen global production and sales deployment, as well as increase sales locations, improve manufacturing and shipping flexibility, and reduce operational risks due to the international trade war, Delta has obtained a majority shareholdings in Delta Electronics (Thailand) Public Company Limited (DET), a listed company in Thailand, since April 2019 and has adjusted its production lines. In line with its business growth, Delta plans to increase investments in Thailand and India in the future to supply local markets and implement despersion manufacturing. These initiatives would help Delta become more flexible in coping with changes in the international market, get a head start on a competitive business environment, and further expand its global business footprint.

Here is a summary of Delta's performance in various business fields in 2019 and future prospects:

 
 
Power Electronics

Delta has prospered greatly from the results of its business development in power electronics over the years. Not only is it the world's leader in power supplies, brushless DC fans, and miniaturized key components, but it has also been recognized as the "ENERGY STAR Partner of the Year" by the U.S. Environmental Protection Agency for four consecutive years. In addition, Delta has received the "Sustained Excellence Award" for two consecutive years. To be nominated by the U.S. Environmental Protection Agency is quite a feat since companies must achieve ENERGY STAR Partner of the Year long-term. This award recognizes the excellent energy-saving features of the Delta's Breez ventilation fans. Moreover, it recognizes Delta's long-term commitment to improving energy efficiency.

Delta has been involved in automobile electronics for over a decade. Delta collaborated with the U.S. Department of Energy to explore wide-band gap-based bi-directional on-board charger modules in 2017, which enable vehicle-to-load capabilities. Delta's performance in the electronic vehicle industry is also recognized by the world's leading car manufacturer, Fiat Chrysler Automobiles (FCA). Delta was presented the "2019 Powertrain Supplier of the Year" award in Detroit, USA, which highlights its close collaboration with FCA.

The power electronics business has contributed to Delta's revenue and profits for many years. In the future, Delta plans to continuously innovate based on its solid foundation in power electronics and control technology, as well as provide more energy-saving and intelligent products, while fulfilling its corporate mission "To provide innovative, clean and energy-efficient solutions for a better tomorrow."

Automation

Delta has developed its industrial automation business for more than 20 years. From providing high quality and high-efficiency automation equipment in the early stages to developing and manufacturing highly intelligent products such as industrial robots, robotic visual systems, PLCs, CNC motion control, and others, Delta has been helping customers in the automotive industry with a variety of visualized control platforms and factory management systems, including Manufacturing Execution Systems (MES). In 2019, Delta provided an integrated solution for wireless communication applications, control, and drives for CNC machine tool manufacturers by connecting their warehouse systems and production line equipment. Delta also provided machine industry customers a visualized system platform and machine solutions by connecting all machining equipment for immediate collection, monitoring, and analysis of data.

To ensure a high degree of competitiveness in intelligent manufacturing and to improve Delta's manufacturing quality while satisfying customers' various needs, Delta began a series of in-house intelligent transformation projects starting with product research and development design (first stage), followed by assessment and trial production (second stage), and production planning (final stage). Delta introduced around 1300 intelligent automation devices to China's production base in 2019, which reduced direct labor by 16% compared to that of 2018. In terms of its overall intelligent transformation, Delta has included 80% of its China production lines in the Company's intelligent manufacturing plans as of 2019.

Building automation is one of Delta's long-term strategies for business development. In addition to Delta Controls, Loytec, and Vivotek Inc., in 2019 Delta acquired Amerlux, a high-end commercial lighting solutions provider in North America. With the said acquisition, Delta is set to accelerate the process of developing smart buildings and providing solutions for sustainable cities, further expanding its global business footprint in building automation.

With the impact of the US-China trade war, the Chinese automation market remained stagnant in 2019. However, given the rigid market demand due to improving industrial structure and intelligent manufacturing, we believe that Delta's automation business will continue to be a main source of growth for the Company in the long-term.

Infrastructure

With the rapid development of global internet services and cloud computing, there has been an increasing need for big data applications, which drives dynamic infrastructure related to data center construction. In 2019, Delta collaborated with Alibaba to launch a "Panama Power Solution" with a high voltage DC power supply. Compared with the traditional data center, panama power subverts the traditional IDC power supply structure. Delta creatively infuses the circuit and magnetic circuit, changing medium voltage 10KV AC directly to 240V DC without the traditional multiple repeaters that introduce medium voltage to direct current, thus completing the power supply in one step with higher efficiency and reliability. Delta saves on the amount of equipment and construction required by up to 40%, improves power supply efficiency of the data center by 3%, and reduces the total investment cost of power supplies by 20%.

Global telecommunication operators are actively preparing networks for the coming of 5G mobile communication. Delta's communication power systems yield 98% energy conversion efficiency and reduce the cost of energy consumption by 12%. Delta's lithium batteries that are charged at night and discharged during the day can be used to save electricity or cut peak power. Delta's power supply and lithium battery products with IP65 protection level can reduce construction time by 70%, support fast miniaturization for 5G, and meet flexible expansion requirements in the future.

In terms of infrastructure, there is a consistent growing demand for distributed energy equipment. Delta provides a variety of infrastructure solutions using innovative technology that helps cities and transportation systems achieve their low-carbon energy transformations. In 2019, Delta provided a complete energy storage system solution for Mitsubishi Heavy Industries Engine & Turbocharger, Ltd. (MHIET), a company under Mitsubishi Heavy Industries, Ltd. The system is currently used in the triple-power demonstration power station of MHIET's factory in Sagamihara City, Kanagawa Prefecture, Japan. Delta has achieved a lower cost for its distribution system through a combination of three types of power: renewable energy, reciprocating generators, and storage batteries for stabilizing the volatile output of renewable energy.

At Delta, we care not only about developing new business and new technologies, but also about managing our company in accordance with Environmental, Social, and Governance (ESG) standards, and we appointed a Chief Sustainability Officer in 2019. Delta has been listed in the "Dow Jones Sustainability™ World Index" for nine consecutive years. We were also recognized as an industry leader for the fourth time in 2019 and acknowledged by CDP in 2016, 2017, and 2019 for the Climate Change Program. In addition, Delta was included in Forbes Magazine's Global 2000, FTSE4Good TIP Taiwan ESG Index, and MSCI Taiwan ESG Leaders Index in 2019. Delta also received the top "CSR Corporate Citizen Award" from Commonwealth Magazine, earned eight major recognitions in 2019 Taiwan Corporate Sustainability Awards, and the world-class 2019 Global Corporate Sustainability award. Delta has been listed as one of Taiwan's top 20 international brands for nine consecutive years. Delta's brand value increased by 12% compared to that of 2018, which indicates its growing strength as a major industrial brand among other nominees.

Over the years, Delta has moved forward with a clear and stable long-term strategic vision, backed by the hardworking team amid a changing and challenging global environment.

We thank all of our loyal clients, shareholders and partners for their continued support. Our management team continues to work alongside our colleagues towards achieving our goals. While pursuing its operational performance objectives and profit goals, Delta is also invested in corporate social responsibility, making it an internationally-respected company that employees can truly be proud of.

Sincerely yours,
Yancey Hai, Chairman
 
 
 
 
 
 
 
 
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