Hello, everyone. Today is a nice day. Hopefully we will going to have such nice days in the coming months. Today again, we will have our IR to report the financial numbers to you. Please just feel free to ask questions after this session. As usual, please note that all the financial numbers I'm reporting today are on IFRS, and the consolidated numbers have been reviewed by CPA. The Q1 revenue was TWD 92.9 billion, representing a 13% year-on-year growth and a 12% sequential decline, which is seasonal. In terms of gross profit, gross profit in Q1 grew by 14% year-on-year and dropped by 14% quarter-on-quarter, due to an unfavorable product mix. GP margin in Q1 dropped to 27.5% versus 28.0%.
In Q4, improved from 27.3% a year ago. In terms of the expenses, Q1 expenses grew by 14% year-on-year and contracted by 9% quarter-on-quarter, with both SG&A and R&D increased by teens compared to a year ago. The OP margin in Q1 contracted to 9.1% versus 10.2% in Q4, but improved from 9.1%, 9.0% year ago. Business wise, we saw double-digit year-on-year growth and sequential declines in all segments. However, component businesses in general were weak, especially for computers and smartphones. Within Automation, Industrial Automation improved, but Building Automation slowed. In Infrastructure, EV chargers were strong, but telecom and data center solutions were sluggish. Year-on-year, we had a significant profit expansion for Power Electronics. Thanks to the improvement in the e-component business.
With some profit contraction for Automation and Infrastructure in Q1. Sequentially, we found profit improvements in Automation and Infrastructure. While the profit of Power Electronics dropped by 26% due to the disadvantage mix. For the operating profit in Q1 was about TWD 1.6 billion . Higher than previous quarters. Our pre-tax incomes in Q1, we had TWD 10 billion profit before tax, up 17% year-on-year and down 14% quarter-on-quarter. For the tax expenses in Q1 was about TWD 2 billion , representing 20% effective tax rate. The net profit after tax in Q1 was about TWD 6.9 billion , up 14% on year and down 13% quarter-on-quarter. The EPS in Q1 was 2.66%. Please just raise your questions if there are any.
Can you give us more details or colors about the Q1 revenues? For example, which businesses were weaker and which businesses were stronger? In Q1, EV solution business grew pretty rapidly by 100% year-on-year basis, as well as the EV charger, external EV charger business. In terms of the weaker businesses, I think, those are mainly related to the smartphone application and the consumer mobile applications. In terms of for the first half of the year, I think the weakness trend of the consumer electronics will remain, at least in the first half of the year. For the Q2 outlook, I think that typically, I mean, in terms of the seasonality, normally I think Q2 is going to be better than Q1.
For on the year-on-year basis, I think the Q2 is also going to be better than the previous year. For the, I mean, the weaker business are still the PC, nobles, smartphone related applications. I think, I think the consumer electronics Can Come, actually, I mean, the Can Come. Power supplies is actually doing not bad, as well as data center related application and networking business. For the write-down, I mean, inventory write-down in Q1 was not related to any like one-off inventory write-off. It's purely accounting practice because we always adopt this stable accounting practice to write down the ancient stocks and inventory. When we are able to, I mean, have more shipment to the customers in the high season, we may have.
I mean, we will have the reverse on it. I want to just follow up the questions on the inventory write-down, because I know that you always adopt this kind of, I mean, accounting practice. You will write down the aging stocks, and then also you will have some ongoing reversals at the same time. I just want to know more about the net impact about this, I mean, write-down and reversal practices. I think it actually depends on the macro environment. As I said, if we are able to ship more, I mean, products to the customers in the high season, then we will have more reversals. I would like to know the Tesla's aggressive pricing cutting strategy in recent months has put some pressure on suppliers.
Have we seen any of our e-customers implement the same strategy or cut the prices for our products? I think Tesla has been pretty active in the market. I think Tesla also. I mean, the management of Tesla also made it pretty clear that they would rather to sacrifice some of their profitability in order to achieve or maximize their market share. I think we have touched on this issue, I mean, before. As I explained, the orders from the OEMs, auto OEMs, are not like, I mean, as dynamic as the orders from the consumer electronic customers. It's not only like. Okay, so we just, we will have the pretty volatile order flows, I mean, in the near term.
I think in general, the prices or the prices of electric vehicles are still, in general, speaking, are still higher than the ICE vehicles. It's pretty sensible, I mean, to see that the electronic vehicles are going to cut their prices in order to achieve larger market shares. I think that is just the nature of the business. I think it's just like any other markets or businesses. It's not impossible that you always, I mean, just ride the growth of the market. You always have to be competitive enough in order to sustain your profits and market share in the market.
In terms of the clientele, we actually don't really work with the new OEMs, but we work with the like the 70% of the top 20 global OEMs. That would be our strategy. I would like to know, were there still any component shortage in Q1? Do you think that it's going to see any improvements? I mean, if there was any component shortage in the supply chain. I think the deliveries, I mean, of our EV business in Q1 was actually pretty in line with our forecast. Indeed, there are still some I mean, just very minor issues of component shortage, but it's insignificant. That's why we still. We had, like, 100% year-on-year growth for our EV solution business.
I would like to know the outlook about the Automation segment. I mean, do you expect to see strong recovery in Industrial Automation business in Q2? I think we indeed, we saw some improvement and recovery for our Automation business and for our Industrial Automation business, but I wouldn't really say that we have already seen very strong recovery for the market yet. For the Building Automation, I think the biggest subsidiary within this Building Automation segment is our LOYTEC, and it has been doing pretty well as well. I would say that in terms of the Industrial Automation market, the market is actually steadily improving, but it's not really, really fast or really strong.
The next question is, how do you see competition in the China AI market? I think the competition is always there, but in terms of the competition landscape, it hasn't really changed much. My next question is related to the AI servers. What kind of business can Delta do with AI servers? What are the specific changes in product specs? Have you seen an increase in orders for AI servers? I think, I mean, even though everyone on the Earth is really excited about the development of AI servers. The thing is still, how do these AI companies make a profit from it? Their business models are still not that clear.
It's not like the Google's business, so you can make the profits or make the money from the advertisements. My point here is still not until they really made it pretty clear about, like, how they are going to make a profit from this AI development, I think they are not really going to invest a really, really huge amounts of this money into it. Actually, even though you are just okay, let's say, just going to build up an traditional data centers, is already really, really pricey. But if you want to, I mean, really build up or construct a AI specific data centers, it's going to be way more expensive. I think that whenever the types of, I mean, different servers.
I think, but when it comes to the server power supplies, the most important thing is still the efficiency. I think we are definitely going to take part of, I mean, this market development for sure. The next question is, I mean, there has been a lot of noises in the car market recently, and there are also some noises talking about inventory correction of components. Do you see any changes in market demand and supply and inventory? I think we have briefly touched on this question before. So far we haven't really seen any significant impact on this. I think that we are on track to grow.
The next question is, how much harm does the weakness of the Taiwanese dollars bring to the company's gross profit margin? Actually, most of Delta's sales are in U.S. dollars, and most of the costs are also in U.S. dollars. The impact of foreign exchange rate changes on GP margin is very limited. The next question is regarding the EV charger market. Do you have any thoughts on the mid to long-term market share? Can you comment on some of the development trends in the industry, including market tech, technology and competitive landscape? Who are your major competitors in the market? I think the EV chargers are actually part of the infrastructure for the EV development. In terms of the EV charger itself, the entry barrier for this product is actually not really high.
The thing is whether, I mean, as a EV charger provider or supplier, whether you are able to make your products, I mean, connected to the power grid, and also whether you are able to have, I mean, a really competitive cost structure. Whether you are able to provide the related systems or the whole solutions, just like provide energy storage system along with the EV chargers. I think those would be the key, I mean, to being competitive, I mean, in the market. In the first half of the year, the overall server market, I mean, appeared to have weaker demand. How have you seen impacted by this, and what is the outlook for the second half of the market?
I think since the beginning of this year, the growth momentum of the server market has been this slowdown a little bit compared to the previous year. Considering the ongoing trend of, I mean, all this AI development and the data center and the data traffic, so I think it's going to be temporary. I mean, this kind of, I mean, slowdown. The next question is: What is the proportion of production capacity in China compared to other countries? Will you accelerate globalization and increase production capacity outside of China in the future? I think China's production capacity still accounts for about 60% of the entire group. We have indeed continued to accelerate the construction of production capacity outside of China, hoping to have greater flexibility in serving customers.
I think the next question is the GP margin this year. I think the GP margin is going to be under some pressure this year just because we have many fast-growing businesses, just like the EV business, Automation business, and e-charging business. Those actually carry lower GP margin, so it's mainly related to this, I mean, product mix issue. The next question is: How long will it take for the inventory correction in the consumer market? When will we expect to see the demand recovery? I think we are not the end consumer product maker, so it's not appropriate for us to really answer this question. The next question is: How do you see the growth potential of telecom power? What are the growth drivers after 5G?
I think this year most telecom operators have actually lowered their CapEx plans. I think that because the telecom base station market is weak, so although we are actively developing related businesses in data center, we may find it difficult to be very optimistic about the business this year just because of the underlying market underlying market softness. How do you see the recovery and growth rate of IA demand in China market after the reopening? I think China is indeed a growing market and of course a very important market for every company. I think that we are not only, I mean, concentrating in China market. But we are also focusing on the markets outside of China, we also want to accelerate the markets and the business outside of China.
The next question is: Was the recent bonds issue related to the distribution of dividends? You can say that, but not entirely. The company's operations require a significant amount of cash, so we often issue or pay debts for financial management purposes. The main purpose of issuing corporate bond is to lock the long-term interest payments. While we issue bonds, we also reduce borrowing from banks and do not increase the company's debt ratio due to the bonds issues. Can you talk about your energy storage as a business? Okay. I will go into these questions. I think everyone have been really optimistic or has been really interested about the development of the energy storage market. I think the market indeed has really high hope to the development of this market.
As our CEO just mentioned, the energy storage system is not just a purely discrete product, you have to be able to connect to the grid. If you ask me about the scale, I think it can be really meaningful. I think the, the key bottleneck is still on the battery supply. I'm not saying that, I mean, there is still, I mean, a significant battery shortage, but the prices or the cost of batteries still remain pretty high. I think it will be the bottleneck every company has to, I mean, tackle down in the future in order to develop this business. The next question is: Do you expect to see a double-digit growth for the overall company, I mean, in the next couple of years?
I think that, well, I'm quite confident about fast growth. I mean, or the double-digit growth for our EV charger business in the next couple of years, considering the new, I mean, the introduction of many new models. We also have other growth drivers and growing businesses, I mean, within other two segments, including the Automation businesses and energy storage system business, although it's still quite tiny for the company, also for our networking business and so on and so forth. We actually see many growth potentials. We actually see growth potentials in many businesses. Of course, I think that I mean, there is also much room for us to improve, I mean, in many aspects.
I think that we will keep going and keep working on the new and growing businesses. Can you share with us your outlook of Delta Thailand? I think Delta Thailand is an independently, I mean, public listed company, so we cannot speak on their behalf. However, we have a close partnership with Delta Thailand. Well, the only thing I can say is I know that they should have, I mean, pretty good growth momentum in the past few years. Also, their capacity is expected to increase rapidly in the next few years. Can you talk about the CapEx plans for this year and next year? We are going to have many construction plans, I mean, these two years. For example, we are going to have.
I mean, we are actually building a new factory in Taiwan, that's expected to be completed, I mean, in the second half of next year. We also expanded some capacity in China. Also we also have the plan to build up new factories in Europe and in the U.S. In Thailand, we are going to expand capacity for two of the factories in Delta Thailand. We are also, I mean, have some new capacity from the India factories. Those were our construction plans, I mean, in these two years. My next question will be: What is the CapEx plan for this year? Will it be reduced due to the economic slowdown? Last year, we actually had like TWD 21.8 billion CapEx.
For this first quarter of this year, we actually had TWD 6.2 billion. I think that this year is going to be slightly higher than last year, because there were actually some deferred CapEx to this year because of there were some labor shortages and material shortages last year. I think because most of our equipment is actually self-made, our plans are pretty flexible and not subject to significant changes due to the economic conditions. Can you give us some clues about the margin trend or the profitability of your EV business this year? I think it just started to make minimal profit. It's not going to have, I mean, very significant improvement in the near term.
We have already answered all the questions from the online audience. Do you have any other questions from the on-site audience? What do you see the IRA, I mean, in the U.S., is still going to impact the business of Delta, or are you going to benefit from this? I think the IRA is actually related to a very significant investment of the Infrastructure. I think according to the IRA, in order to have or to get a subsidy from the government, that you have to have your products made in the U.S. That's why as our CEO just mentioned that we are going to have some new capacity, I mean, in the U.S. I think that is also partially for this IRA.
There are still some issues. I mean, for example, if you want to make the products in the U.S., the costs are going to be higher. For example, the labor cost is definitely much higher than you make products elsewhere. The supply chain is also another issue. Because the supply chain in the U.S. is actually not as comprehensive as it is, I mean, for example, in China or in other countries. When you don't really have, I mean, that many options when you choose your suppliers, the cost is definitely going to higher. Eventually the consumers will have to pay for it. We will keep an eye on this trend.
Still, my next question is related to the EV business, because I think as you can see, some of the OEM statements started to think about to cut the prices. As a Tier 1 supplier, are you facing or experience any kind of, I mean, price cutting pressures from your customers? The EV market is actually massive market. Also the EV customers, which are the OEMs, they are actually crystal clear about every single bond cost, I mean, of their materials. They're also pretty clear about it's not easy for any supplier to get their orders. For example, that you have to invest a lot, and also you have many upfront investments in order to get orders from the OEMs.
You are not going to get the revenues or get any kinds of, I mean, money or profit. I mean, in the first couple of years when you start to have the business with the OEM clients. I think in terms of entry barrier, it's pretty high. Just because, I mean, it's not easy for any supplier to make a profit, I mean, from this e-component business. I think in terms of the pricing, I mean, as a, as a Tier 1 supplier, it's actually stable now. Of course, going forward in the future, I mean, every supplier will still need to take some responsibility for the customers to reduce the costs.
That is also something that every supplier, I mean, including us, we will have to work continually work on this. But as I said or as I always learned, this EV business is not going to be a very high-margin business. At the very least, it's not going to be a very high-margin business at the beginning. That would be the rough idea for this business and market. Can you give us, like, a little more details about your inventory write-down policies? Our practice is, we actually keep monitoring the inventory in our warehouses. For example, if some of the materials or components, they have been in the warehouses for 90 days, then we will actually recognize a certain percent of inventory value write-down of it.
The next level is 120 days, then 180 days, and a year or so. CEO just mentioned that you're going to construct some new factories, I mean, in the next couple of years. What are the purposes of these construction plans? Just because we actually said, I mean, to grow the company and to see the company grow, I mean, in the next couple of years. We will have to, I mean, build up the capacity beforehand. Because if you start, for example, you just start to look for a location or a land, and you acquire land, and then you build up the, you build the buildings or factories or capacity.
You won't really have the capacity or the new capacity until, I mean, in three years. That's the reason why we will have to do it right now. The reason we will have to, I mean, do all those construction projects, because we have to, I mean, be prepared and then to get ready for the new orders, I mean, in the future. Can you talk about what are these new capacities for? The EV business is currently one of applications. EV charger, I mean, is another one. Also, we have moved or shifted some of the production from China factories to elsewhere, for example, to the U.S. If your customers, I mean, require you to shift your capacity elsewhere, will your customers pay for it?
I think it's subject to the negotiation process, because, for example, if your customers don't really have, I mean, many options, or, I mean, in terms of suppliers, they will have to pay for it. If they have, I mean, three-four , let's say, I mean, suppliers, then you will have to, I mean, pay for it yourselves. We actually have sure about our strategy of, I mean, decentralized manufacturing strategy. We actually have been working on this, I mean, for many years. I think that we also made some. We also took some approach, I mean, in 2027. Before 2027, actually the manufacturing or the factories in different regions, they were, I mean, managed, I mean, independently.
After 2027, in 2017, we have established a global manufacturing office, so to streamline all the manufacturing processes. Also that is one of the reasons why we are able to be more agile in terms of ship some of the productions from a country to another. What we have been doing is, we have been accumulating the experiences of small manufacturing. Because we have this, I mean, centralized and global manufacturing office, so we are able to duplicating the success experience, I mean, from a factory to another factory, maybe another region. The final question is related to the EV chargers. I think as our CEO just mentioned, the entry barrier for the EV chargers is actually really high.
Even for the suppliers or some companies, they are not the electronic maker or as they also like to participate in this market. Eventually it still depends on your competitiveness, I mean, in the market. For example, if you look at EV chargers, I mean, it doesn't really look very complicated, but it actually is still includes a very profound know-how, domain know-how of it. Just like the safety issue and also for the fast charging DC chargers, it's even higher entry barrier. I mean, for many suppliers, they are not expert in this area. If you look at the fast charge chargers, the output, the power output of them are easily like over 50 kW, 100 kW or even all the way to 200 kW.
It's not like the power output of your home appliances. The safety issue is going to be very important and how. Also whether you are able to connect to the power grid and whether you are able to, I mean, to have the software to have, I mean, profitable business model from it. Those are part of the key in terms of to, I mean, make a profit from this business. Can you talk about the cooling for. Can you talk about the cooling technology or the cooling solutions you have? I think traditionally the. You think about the cooling, they are more or normally they were more related to the components, for example, the cooling fans.
Nowadays they, there are actually more and more new cooling modules or cooling systems. For example, the liquid cooling or just the hybrid cooling system. I think we actually have a pretty comprehensive, I mean, product offerings and technology. I think the technology is still, I mean, keep updating and developing. I think in terms of the product portfolio, we are, I mean, we actually have a wide range of solutions for our customers, but we still keep an eye and always thinking about whether there are still any other new applications there where we are able to find the opportunities there. Okay. If there are no any other questions. Thank you for coming today. Thank you.