Fri, Jan 23, 2009 - Page 12 News List

AU Optronics post quarterly loss

By Elizabeth Tchii  /  STAFF REPORTER

AU Optronics Corp (AUO, 友達光電) yesterday posted a record net loss in the fourth quarter of last year, citing sluggish demand for its products.

“Impacted by gross loss and a low loading rate, the company recorded a higher-than-expected net loss of NT$26.6 billion,” AUO vice president and chief financial officer Max Cheng (鄭煒順) told investors yesterday.

For the three months ending last month, sales fell 42.6 percent to NT$59.8 billion (US$1.8 billion).

The nation’s largest manufacturer of thin-film-transistor liquid-crystal-display (TFT-LCD) panels saw a 27.2 percent decrease in shipments of large panels and a drop of 28 percent in average selling prices (ASP).

Shipments of small and medium panels fell 23 percent quarter-on-quarter because of seasonal factors, the company said.

In the fourth quarter, AUO adopted a policy of keeping inventory levels at a minimum and revised its inventory accounting rules, which also affected its bottom line, the company said.

Meanwhile, consolidated revenue for the full year fell 11.7 percent year-on-year to NT$423.9 billion, while net income dropped 61.7 percent to NT$21.6 billion, translating into NT$2.5 in earnings per share, compared with NT$7.22 in 2007.

Despite dismal fourth-quarter results amid the global economic slowdown, AUO’s management was pleased to post a full year gross margin of 13.1 percent and an operating margin of 7.2 percent, the company said. In addition, the management team took pride in successfully lowering inventory levels to NT$23.6 billion in the fourth quarter — a quarter-on-quarter drop of 40.8 percent, it said. Inventory turnover was cut to 36 days last quarter from 40 days in the previous quarter.

“At least the worst is over. Now AUO can start the New Year with a clean slate and focus on creating cash margin rather than selling at a loss to get rid of excess inventory like we did last quarter,” AUO executive vice president Andy Yang (楊本豫) said.

Despite his optimism, Yang lowered the company’s guidance for this quarter from the previous quarter. He forecast a 10 percent quarter-on-quarter drop in shipments of large panels, with shipments of TV panels stagnating and panels for use with information technology (IT) dropping as much as 20 percent.

In addition, shipments of small and medium panels could see a 30 percent quarterly drop, he said.

Yang said ASPs would likely stagnate for TV panels and decrease slightly for IT products. Overall loading rate should stay at around 50 percent, he said.

Looking forward, Yang said the company’s focus would be on earnings rather than increasing market share at a loss. Yang said, however, that there were opportunities for growth in markets such as China.

As the world’s third-largest LCD maker, AUO will “carefully manage its capital expenditure and maintain a cautious position in terms of its capacity input in accordance with market demands, as well as strengthening research and development efforts to enhance its long-term competitiveness” Cheng said.

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