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AUO profits soar on high panel prices

AU Optronics Corp (AUO, 友達光電), the world’s third-largest maker of liquid-crystal-display (LCD) panels for computers and TVs, reported yesterday its second-highest net profits after prices for panels used in TVs rebounded.

To meet growing customer demand for 57-inch-plus TV screens, AUO said it would build a 10th or 11th-generation plant in 2011 or 2012 in Taiwan, company vice chairman Chen Hsuen-bin (陳炫彬) told an investors’ conference.

The company would invest an unspecific amount of capital on the new plant in the next three years, Chen said.

IMPROVEMENT

During the quarter ended March 31, AUO said net income was NT$27 billion (US$891 million), or NT$3.41 per share, after deducting NT$3.7 billion in employee bonuses, a significant improvement from losses of NT$5.1 billion the previous year, a company statement said.

The average selling price for PCs and TVs rose 26 percent year-on-year to US$178 per unit, the company said.

“The results are brilliant and much better than the NT$20 billion street consensus, confirming that the sub-prime credit crisis in the US did not have any impact on the company,” said Daniel Wang (王德善), a LCD industry analyst at Primasia Securities.

“Unlike what many analysts had expected, the stronger Taiwanese currency did not erode the company’s gross margin nor weaken its competitiveness,” Wang said.

AUO said its gross margin had improved to 27.1 percent, compared to 27 percent in the previous quarter. It booked NT$600 million in foreign exchange losses last quarter.

“Demand for computer monitors has been quite healthy in the second quarter, but we are closely watching [demand from the] consumer electronics sector — especially for TVs,” Chen said.

“The second quarter will be better than the second quarter last year,” he said, adding that the company was cautiously optimistic about demand for the rest of this year.

STEADY

Computer panel prices are expected to remain steady this quarter, while prices for TV panels could drop by a low-single digit percent from last quarter’s US$351 per unit, the company said.

Overall, shipments of PC and TV panels could increase by a low-single digit percent this quarter, it said.

Overall, the company was cautiously optimistic about the rest of this year, Chen said.

“Channel inventory is normal and healthy. We only see slightly higher [stockpiles] at TV assembly lines in China ahead of May shopping season and the Beijing Olympic Games in August,” AUO vice president Paul Peng (彭雙浪) said.

Peng said inventories at TV makers in China should return to normal level by next month.

The comments assuaged fears that weak demand in China could cause a substantial rise in panel stockpiles, Wang said.

The flat-panel company said it would maintain capital spending this year at about NT$140 billion.

Earlier this month, the company said revenues rose 69 percent year on year to NT$136.63 billion in the January to March period, with a 12 percent decline on a quarterly basis over seasonal factors.

Separately, the company said it would spin off its light-emitting diode (LED) unit to create a new company, Lextar (隆達) in the next two months.

This move would pose a threat to existing LED suppliers, Wang said.

AUO shares rose 0.17 percent, or NT$0.1, to NT$58.4 yesterday, defying the benchmark TAIEX’s 0.51 percent loss.


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