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CPT back in the black on rising display prices

Chunghwa Picture Tubes Inc (CPT, 中華映管), the nation's third-largest flat panel maker, yesterday reported its strongest quarterly pre-tax income in 14 quarters, benefiting from rising prices amid robust demand for computer screens.

The Taoyuan-based panel maker also forecast that the first quarter would not be as slack as it had been owing to strong demand from emerging markets and improved supply because of the industry's disciplined capacity expansion last year.

CPT's comments echoed industry leader LG Philips LCD Co's optimistic outlook given earlier this month.

CPT's pre-tax income reached NT$6.22 billion (US$192 million) in the fourth quarter of last year, compared with losses of NT$2.06 billion in the same period of 2006, a company statement showed.

The fourth-quarter figures are the highest since the second quarter of 2004 and were up about 21 percent from NT$5.16 billion in the third quarter of last year.

Average selling prices improved 4 percent year-on-year, or 2 percent quarter-on-quarter, to US$152, lifting the gross margin for its liquid-crystal-display (LCD) business to a better-than-expected 27 percent, the company said.

"The first quarter is historically a slow season, but it will be better [this year] owing to improved supply-demand," CPT spokesman James Wu (巫俊毅) said.

LCD panel supply may exceed demand "mildly" in the first three months of this year, Wu said.

"Our major customers did not cut orders for the first quarter," CPT vice president Brian Lee (李學龍) said.

Shipments of computer and TV panels would drop about 11 percent to 6.6 million units in the current quarter, compared with 7.4 million last quarter, Lee said.

Average selling prices would drop 5 percent to 8 percent before rebounding next quarter as customers rebuild inventory, Lee said.

Computer and TV screens made up about 90 percent of CPT's total shipments in the final quarter of last year. Revenues expanded 31 percent year-on-year to NT$41.66 billion last quarter.

The company plans to increase capital spending this year by 24 percent to NT$15.9 billion, from NT$12.8 billion last year, to buy new equipment for its sixth-generation plant.

It will also finalize its investment plans for a next-generation factory by the end of this year to make TV and computer panels to meet the forecast next peak in demand in 2010, Wu said.

"It is just a problem of timing. We need strong commitment from major customers. But we also hope to benefit from the next upturn, perhaps in 2010," Wu said.

The company has NT$31.34 billion in cash and equipment as of last year and starting this quarter, it will book part of its asset gain from selling a less advanced plant to domestic handset panel manufacturer Giantplus Technology Co (凌巨) for NT$6.5 billion, he said.
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