AU Optronics Corp (友達光電), the world's third-largest maker of liquid-crystal-display (LCD) panels, yesterday posted its strongest quarterly results in the last six for last year's final quarter, helped by robust demand for higher-priced panels for televisions.
The company expected the growth in demand to carry on into the first half of this year, which would alleviate the pressure of supply glut, after bigger rivals Samsung Electronics Co and LG Philips LCD Co of South Korea planned to ramp up production in new plants ahead of schedule.
"We think [the oversupply] will be a single-digit percentage point in the first quarter as we are now more optimistic about the demand side ? We don't expect any big changes in the second quarter," Hsiung Hui (熊暉), a vice president of AU Optronics, told an investor conference.
forecast raised
AU Optronics raised its forecast for TV panel sales this year to over 40 million, more than double last year's 19 million sets, as consumers are adopting slim-screen TVs more rapidly than the company expected, Hsiung said.
"Demand for computer panels also looks stable," Hsiung said, adding that the price for computer panels would hit bottom in March after about a 10 percent drop quarter-on-quarter for the current three-month period.
Bullish about the LCD TV market, AU Optronics yesterday also adjusted its capital spending upward for this year to as much as NT$95 billion from earlier estimates of NT$75 billion, in a bid to expand its TV panel production lines in Taiwan.
The company said growing demand for LCD TVs as well as strong cost-saving capabilities have primarily helped AU Optronics deliver stronger-than-expected quarterly earnings during the final quarter of last year.
For the three-month October to December period, AU Optronics posted its third-highest quarterly earnings ever at NT$11.47 billion, or NT$2.02 per share, and the highest since the first quarter of 2004. Revenues set an all-time high at NT$72.8 billion, the company reported earlier.
The average selling price for TV panels increased around 33 percent year-on-year to US$385 per unit, while the price of computer panels slid slightly to US$170, according to the company's statistics.
The latest quarterly results represented a turnaround from losses of NT$2.23 billion during the fourth quarter of 2004.
beat expectations
"The quarterly results beat the expectations of most market watchers," said Frank Lee (李宜家), an analyst with Deutsche Securities in Taipei. He had predicted that AU Optronics would make around NT$10 billion in net income.
Looking ahead, AU Optronics chief executive officer Max Cheng (鄭煒順) said sales of LCD panels measuring bigger than 10 inches would hold stable or slide slightly this quarter from 9.6 million units last quarter.
Sales of TV panels would jump 20 percent in the current quarter from the last three-month period to make up a 35-percent share of the company's total revenues, up from 27 percent last quarter, Cheng said.
Cheng also expected the price for TV panels to rise by a mid-single-digit percentage point.
"The forecast may suggest weaker-than-expected computer monitor demand," said Frank Wang (王安亞), an analyst with Morgan Stanley in Taipei. Wang expected panel sales to rise about 3 percent this quarter.
"AU Optronics sends a positive message, but I think there is risk in the second quarter as new production will come on line," Wang said.
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