Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest maker of flat panels, expects a turnaround this quarter due to stable panel prices and significant cost savings, ending three straight quarter losses, a company executive said yesterday.
A price decline driven by overcapacity and a run-up in inventory has caused Chunghwa Picture to incur heavy losses over the past nine months, but the company said panel prices would hold steady this quarter on seasonal demand and reducing stockpiles.
"Our overall average selling price (ASP) will be flat as price hikes in PC panels should largely offset price decline in TV panels," James Wu (巫俊毅), a vice president of Chungwha Picture, told investors during a conference call yesterday.
The company's ASP for computer and TV panels plunged 23 percent to US$123 per unit last quarter, compared to US$159 a year ago.
Chunghwa Picture posted a quarterly loss of NT$4.63 billion (US$141 million) in the third quarter, or negative NT$0.6 per share, on price erosion, bringing total losses to NT$11.88 billion, or NT$1.45 per share, in the first nine months of the year.
The flat panel maker posted lower quarterly losses of NT$695 million, or NT$0.1 a share, for the same period last year.
Looking ahead, Chunghwa Picture said shipments for large-sized panels would jump 14 percent to approximately 7.1 million units this quarter, led by TV panels, from 6.2 million units last quarter, after it ramped up a new plant.
With rising output from the new advanced sixth-generation (6G) factory, the company would be able to trim more than 15 percent in costs at quarterly rate during the final quarter, Wu said.
As a result, "we will have a very different performance in operating [margin] starting October? In other words, operating margin will become positive," Wu said.
Operating margin widened to negative 12 percent during the July to September period from negative 2 percent a year ago.
Revenues expanded by 18 percent year-on-year to NT$332.53 billion last quarter with 87 percent from computer panels and 13 percent from TV panels.
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"We will closely monitor Chunghwa Picture's progress in improving its gross margin as the target is quite aggressive," Yu said.
Long-term, Yu said Chunghwa Picture still has a long way to go before it catches up with first-tier players such as AU Optronics Corp (友達光電) due to its slow deployment in TV panel manufacturing.