AUO posts robust Q1 net profit

AU Optronics Corp (AUO, 友達光電), the world's third-largest maker of liquid-crystal display (LCD) panels used in computers and televisions, yesterday posted strong first-quarter results, helped by robust demand for slim-screen TVs.

The company, which supplies LCD TV panels to numerous TV brands such as Sony Corp, said the uptrend would carry into the current quarter for both TV and computer segments.

However, echoing industry leader LG.Philips LCD Co's view, AU Optronics warned that panel prices would decline by between 5 percent and 10 percent quarter on quarter owing to a mild oversupply.

"Overall demand will be on the rise in the second quarter based on our customers' forecast," said Hsiung Hui (熊暉), a vice president of AU Optronics.

Hsiung said that prices for computer panels started stabilizing this quarter, as channel suppliers built inventory.

In the first three months of the year, AU Optronics reported a net profit of NT$6.65 billion (US$205 million), or NT$1.14 per share, according to the company's statement. That compares with a loss of NT$2.13 billion in the first quarter last year.

On a quarter-on-quarter basis, the company's net profit fell 42 percent owing to the sharp drop in panel prices and the seasonal slowdown in the PC market.

However, the results were still better than most analysts' expectations. Deutsche Bank AG's Frank Lee (李宜家), for example, projected AU Optronics would earn NT$4.5 billion in the first quarter.

AU Optronics also outpaced its Korean rivals for the second quarter in a row in terms of operating margin.

The company posted a favorable operating margin of 12 percent, as compared with LG.Philips LCD, which reported a mere 2 percent for the same period.

"The TV panel division has become AU Optronics' biggest business. This has been a great help for the company's financial performance," said chief financial officer Max Cheng (鄭煒順).

TV panels accounted for a bigger 35 percent of AU Optronics' sales in the first quarter, up from 13 percent a year earlier. Revenues jumped 70 percent to NT$66.25 billion from a year ago, the company reported earlier.

The average selling price for TV panels surged around 35 percent to US$404 in the first quarter, compared with US$299 in the same period last year.

Meanwhile, the average selling price for computer panels fell 14 percent during the same period, according to the firm's statistics.

Cheng also said that the synergy from acquiring local rival Quanta Display Inc (廣輝電子) would be reflected in its earnings early next year.

AU Optronics announced the acquisition via a share swap early this month.

In light of the increasing demand, Cheng expects shipments for LCD panels that are larger than 10 inches to post a percentage rise in the low teens in the second quarter from 9.38 million units in the previous quarter.

However, growth on the demand side may not be strong enough to offset the price erosion.

"We expect to see significant quarter-on-quarter earnings decline in the second quarter," Deutsche Bank AG's Lee said.

Shares of AU Optronics rose 5.5 percent to NT$54.20 on the Taiwan Stock Exchange yesterday.

Its rival, Chi Mei Optoelectronics Corp (奇美電子), saw its share rise 3.1 percent to NT$46.60 on news that Japan's Sharp Corp may outsource panels to the Taiwanese maker.