Fri, Aug 03, 2007 - Page 12 News List

Chi Mei posts higher profits, lower costs

ROSY OUTLOOK Chi Mei Optoelectronics Corp is expected to post record high revenues and shipments in the current quarter. It also plans to trim costs further


Chi Mei Optoelectronics Corp (奇美電子), the nation's second-largest maker of liquid-crystal-display (LCD) screens, yesterday reported its highest profits in five quarters on rebounding demand and improving cost efficiency.

The firm said it expected even stronger sales in the third quarter on sustained demand for computers and televisions.

The Tainan-based company posted profits of NT$3.39 billion (US$103 million), or NT$0.48 per share, during the quarter ending in June, compared to a loss of NT$944 million in the same period a year ago, and a deficit of NT$1.1 billion in the first quarter of this year.

The second quarter results were the strongest since the first quarter of last year, as demand recovered and a higher than expected 6 percent reduction in costs from the previous quarter.

"We are seeing solid demand, for notebooks especially, in the third quarter on seasonal factors and Vista demand. Supply will not be able to catch up with demand, leading panel prices to rise further," company president Ho Jau-yang (何昭陽) said.

Chi Mei earlier this month posted NT$61.1 billion in revenues for the second quarter, up 68 percent annually, a 29 percent quarterly growth.

The company joined bigger rivals from South Korea and at home, such as AU Optronics Corp (友達光電), in giving an upbeat outlook for the volatile LCD manufacturing industry.

"Orders for notebook computer panels already are lining up into the fourth quarter," Ho said. "The second half will be a very good season."

Shipments are expected to expand 20 percent to 30 percent in the current quarter from 11.58 million units last quarter, and panel prices are expected to increase another 5 percent to 15 percent from US$159 per unit over the same period, Ho said.

Chi Mei is expected to post record high revenues and shipments in the current quarter, Ho said.

The company also plans to trim costs by another 5 percent or more during that period, he said.

"Chi Mei's third quarter profits should be an all-time high as it presented a good outlook, even better than that offered by AU Optronics," said Eric Lin (林宜正), who tracks the flat-panel industry for Taipei-based Yuanta Core Pacific Securities (元大京華證券).

A concern would be that whether end demand would rebound strongly enough later this month to digest the excessive inventory of PC monitors, despite the healthy sales of laptop and TV panels, Lin said.

Looking ahead, the flat panel maker said disciplined capacity expansion of the global LCD players and stronger demand may mean the latest up-cycle outlives previous ones.

"Overall, supply will be constrained next year," Ho said.

Chi Mei said it planned to cut 10 percent to 20 percent of its spending on new facilities and equipment next year, from the NT$70 billion to NT$75 billion expected this year.

The company has suspended the construction of a sixth-generation plant costing NT$90 billion and has not yet set a timetable to build an eighth-generation fab that would make TV panels that are bigger than 50-inches.

Chi Mei shares jumped 1.14 percent to NT$35.40 and AU Optronics climbed 0.95 percent to NT$53.10 on the Taiwan Stock Exchange.

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