AU Optronics raises profit forecast

"Although demand remained healthy during the first half of [this year], the average selling price of panels only improved moderately during the period."

Max Cheng, AU Optronics chief financial officer

Flat-panel maker AU Optronics Corp (友達光電), quadrupled its pretax profit forecast for this year after posting a second-straight quarter of profit.

Hsinchu-based AU Optronics raised the forecast to NT$10.5 billion from the NT$2.58 billion amount announced on April 24, due to better-than-expected results in the first half of the year, the company said in a statement yesterday. For the second quarter, AU Optronics had net income of NT$2.9 billion after posting NT$179 million in profit for the first three months.

For the first half, net income reached NT$3.1 billion, exceeding the company's initial pretax profit forecast for the full year. AU Optronics said its improved earnings came from growing demand for panels used in notebook computers and desktop monitors.

"Notebook demand is increasing," chief financial officer Max Cheng (鄭煒順) said in an interview.

"We're expecting better demand for personal computers," he said.

AU Chen Hsuan-bin (陳炫彬) attributed the company's strong results to business strategy. "Although demand remained healthy during the first half of 2003, the average selling price of panels only improved moderately during the period," he said in a statement.

"The remarkable performance AU Optronics achieved in the first half of [this year] is mainly attributed to product mix management, technology advancement, further enhanced customer portfolio, efficient capacity allocation, effective cost reduction and strong growth in small and medium panel business" the statement said.

Growth the small and medium panel business area was mostly consumer electronics companies, he added.

A new so-called fifth-generation, or 5G, factory is to make larger television-size screens and will help cut costs, the company said.

AU Optronics is the world's third company, following South Korea's Samsung Electronics Co and LG Philips LCD Co, to open a fifth-generation plant. Smaller rivals in Taiwan, such as Chi Mei Optoelectronics Corp (奇美電子), are also opening 5G plants this year. On Monday, Chi Mei announced the opening of its 5G plant in the Tainan Science-based Industrial Park in southern Taiwan.

Sales screens used in televisions, which accounted for about 5 percent of AU Optronics's revenue in the first half of this year, will increase the rest of the year, Cheng said. Revenue in the second half is expected to rise to NT$55 billion from NT$42 billion in the first half, he said.

AU Optronics posted a loss in the fourth quarter after panel prices tumbled by about a third from a peak in the middle of the year. For the second quarter, sales slipped 2 percent to NT$22.2 billion. The decline was smaller than the 19 percent sales slide in the first quarter.

Shares AU Optronics rose NT$0.20, or 0.6 percent, to NT$32.70 before the earnings announcement.