Amid the worldwide transition towards renewable energy, Fortune Electric, a Taiwan-based manufacturer specializing in power transformers and distribution boards, has emerged as a key player in shaping Taiwan's energy landscape and contributing to the global shift.
General Manager I-Te Hsu recently underscored the company's three primary growth drivers on an earnings call: exports, resilience programs, and green energy. Currently, 36% of Fortune Electric's revenue comes from exports, a proportion Hsu anticipated to witness significant expansion by 2024-2025. This growth is propelled by the escalating global adoption of renewable energy and the subsequent surge in demand for the reconstruction of power systems.
Primarily directing its exports to the United States, Hsu attributes Fortune Electric's noteworthy revenue performance to key legislations such as the Infrastructure Investment and Jobs Act (IIJA) in 2021 and the Inflation Reduction Act (IRA) in 2022. On top of stellar revenue, the sector of exports also accounts for over 50% of the company's profits, Hsu says.
Fortune Electric's record-breaking revenue surge
Fortune Electric reported a remarkable 74.55% growth in revenue from January to November 2023, reaching NT$11.325 billion (US$350 million), compared to NT$6.488 billion during the same period in 2022. This surge in revenue is accompanied by substantial increases in gross profit and operating net profit.
In the realm of resilience programs, Taiwan Power Company (Taipower) has taken proactive measures to prevent a repetition of the significant power outage in 2022. They launched the "Grid Resilience Strengthening Construction Plan," a ten-year initiative with a budget of NT$564.5 billion (excluding offshore islands and power plant projects). According to Hsu, a notable portion, ranging from 18% to 25%, of the opportunities within Taipower's plan are directly linked to Fortune Electric's products and services. This not only underscores the company's significance but also opens up substantial avenues for the broader participation of Taiwan's heavy electrical industry.
Regarding green energy, Hsu mentioned Fortune Electric's investment in both terrestrial and aquatic renewable energy, emphasizing active involvement in the localization of wind power generation. This initiative spans solar energy, wind power, small hydropower, energy storage, electric vehicle charging stations, geothermal, and marine energy.
As of November 2023, the revenue distribution for Fortune Electric's three major business segments—exports, resilience programs, and green energy—is 36%, 36%, and 32%, respectively, which Hsu deems a healthy distribution.
The future ahead
Looking ahead, I-Sheng Hsu expressed that as the issue of net zero emissions gains societal attention, energy transition becomes crucial. He emphasized that various countries are realizing the inadequacy of existing power systems in coping with energy transition, leading to a need for replacement and improvement within the next 5-10 years.
Furthermore, amid global economic uncertainties, infrastructure development, including power systems and road reconstruction, has become a common approach for countries. This surge in market demand poses a significant challenge for industry players to meet the supply-demand gap.
Hsu pointed out that Taiwan's historical competitor, South Korea, has faced steep anti-dumping duties imposed by the United States. Meanwhile, due to the policies of the Trump administration five years ago, the US imposed import tariffs of 25% on any relevant Chinese products, prompting Fortune Electric to diversify its supply chain by relocating back to Taiwan. This strategic move, combined with industry dynamics and international economic conditions, contributed to the industry's high growth, says the Fortune Electric CEO.
In response to the highly anticipated export outlook for 2024-2025, I-Sheng Hsu revealed that while specific proportions cannot be disclosed, the export share will continue to grow. He also disclosed that some clients have already requested triple the production capacity. To meet these demands, Fortune Electric is gradually implementing smart factories to maximize efficiency. While the company already experienced robust growth in 2023, considering the external environment and global demand, Hsu is optimistic about the surge continuing into 2024-2025.
