Sat, Aug 19, 2006 - Page 12 News List

Chunghwa Picture posts record loss

PRICE PLUNGE A sharp drop in prices and overcapacity hit the LCD maker hard, but it expected things to improve as its first sixth-generation plant ramps up production


Chunghwa Picture Tubes Ltd (中華映管) yesterday posted record quarterly net losses as prices plunged on overcapacity. But the nation's No. 3 maker of liquid-crystal-display (LCD) panels said it expected operations to improve this quarter on stabilizing prices.

Losses for the three months ending June 30 expanded to NT$5.78 billion (US$177 million), or NT$0.7 a share, Chunghwa Picture said yesterday. This compared to a NT$3.41 billion loss, or NT$0.44 per share, a year earlier.

This would be the worst period as "channel inventory is shrinking and prices for computer monitors are on the rise," said Brian Lee (李學龍), a vice president of the company's sales and marketing division, during a conference call.

The price decline for panels used in slim-screen televisions would also slow down by dropping by another 2 to 3 percent this month from last month, Lee said.

Monthly shipments during the current quarter would rise around 8 percent to more than 2 million sheets, compared with 1.85 million sheets last quarter after its first sixth-generation (6G) factory started ramping up production, Lee said.

The new plant is expected to churn out 72,000 sheets of computer and TV panels a month by the year-end, from the current 35,000 sheets, he said.

"All those positive signs indicate the operations of Chunghwa Picture will improve in the third quarter from the second quarter," company financial executive James Wu (巫俊毅) said in a telephone interview.

The company's second-quarter losses were the highest since it reported a NT$4.53 billion loss in the final quarter of 2004. But the second-quarter loss fell short of the expectations of analysts such as Eric Lin (林宜正), who tracks the LCD industry for Yuanta Core Pacific Securities (元大京華證券).

Lin projected Chunghwa Picture would lose NT$3.2 billion in the second quarter.

"The company has a much lower yield rate at its 6G plant than I expected," he said.

"Chunghwa Picture is likely to make significant progress in the current quarter based on the outlook the company gave. But it will be still in the red as its costs are much higher than competitors," Lin said.

Chunghwa Picture said earlier this month that revenues expanded 21 percent to NT$27.72 billion last quarter from NT$22.96 billion a year ago. Computer panels made up over 90 percent of its LCD business.

The average selling price for LCD panels, however, dropped 22 percent annually to US$141 per unit on average last quarter, the company said.

Chunghwa Picture shares lost 13.25 percent to NT$7.33 in the second quarter, compared to a 0.66 percent gain on the benchmark TAIEX index in the same period.

Almost all LCD panel makers have, along with Chunghwa, posted negative earnings reports, except for AU Optronics Corp (友達光電), the nation's largest panel maker.

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