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Chunghwa Picture Tubes posts big loss

Chunghwa Picture Tubes Ltd (中華映管), the nation’s third-largest maker of liquid-crystal-display (LCD) panels, posted record quarterly losses yesterday as prices took a dive and the deteriorating economy curtailed consumer spending on PCs and other electronics.

In the third quarter, Chunghwa Picture Tubes posted NT$6.08 billion (US$182 million) in net losses, compared with net income of NT$5.12 billion a year ago, after prices plunged by 38 percent to US$93 per unit, a company statement said.

As a recovery may not arrive in the short term, Chunghwa Picture Tubes planned to more than halve its capital spending for this year to NT$6.9 billion, a countermeasure taken by most major LCD panel suppliers, including South Korean LG Display Co Ltd, to keep cash for operation during hard times.

“It looks like the economic slowdown will be in place for a longer period of time [than expected], which has hurt end demand. To fare this downturn, our top guideline will be strictly controlling inventory and preserving cash,” company president Kay Chiu (邱創儀) said.

The company had around NT$26 billion in cash and tradable equities as of last quarter.

Chunghwa Picture planned to delay a NT$9 billion capacity expansion plan at a sixth-generation (6G) plant by one year to 2010.

It originally planned to expand the plant’s monthly output to 120,000 mother glasses measuring 1,500mm by 1,800mm early next year from its current production rate of 90,000 per month.

To cope with stagnant demand, Chunghwa Picture planned to lower equipment loading between 60 percent and 70 percent this quarter from 90 percent last quarter.

That would translate to a 16 percent decline in PC and TV LCD panel shipments this quarter from 5.59 million units last quarter, the company said. Over 90 percent of its shipments are PC panels.

“Customers are cautious about inventory buildup as demand cools down because of the spreading economic slowdown primarily in the US and Europe,” said Brian Lee (李學龍), a vice president of Chunghwa Picture Tubes.

Lee said he expected prices for PC and TV panels to drop another 10 percent quarter-on-quarter during the final quarter of this year before a slight rebound in the first quarter next year. Prices may rebound by US$5 to US$10 per unit after inventory falls to a relatively low level, Lee said.

To help lower expenses, Chunghwa Picture Tubes said it had cut payroll for senior executives by 10 percent. About 50 people were affected, it said. No job cuts will be considered, it said.

In related news, HannStar Display Corp (瀚宇彩晶), the nation’s fifth-biggest flat panel maker, posted net losses of NT$3.2 billion yesterday for the third quarter, the weakest result in 15 quarters.

HannStar made NT$6.14 billion in net profits during the third quarter of last year.

The company planned to cut output by 20 percent to 30 percent this quarter after fully operating its utilities last quarter, which would lead to a 25 percent to 35 percent decline in shipments this quarter, from 4.75 million units last quarter.

HannStar also planned to freeze spending on new equipment next year, compared with a budget of NT$2.5 billion for this year.

Prices may drop by around 15 percent quarter on quarter from US$96 per unit following a 34 percent year-on-year decline, or a 26 percent drop quarter-on-quarter, the company said.
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