AU Optronics Corp (AUO, 友達光電), the nation’s second-biggest LCD panel maker, yesterday posted its weakest quarterly net income in three quarters as sluggish demand from TV and PC makers drove down prices and factory utilization.
During the quarter ending Sept. 30, AU Optronics’ net income plummetted 97 percent to NT$227 million (US$7.35 million), from NT$7.42 billion in the same period last year, according to the firm’s financial statement.
On a quarterly basis, profits were down 98 percent from the NT$11.25 billion it made in the second quarter.
The Hsinchu-based company said its equipment loading rate fell to about 80 percent last quarter as customers cut back orders amid high inventories, which in turn pushed up its cost of goods sold by 10 percent.
Given higher costs and a 6.5 percent sequential decline in prices, AU Optronics’ gross profit tumbled more than 69 percent to NT$6.24 billion last quarter, from NT$20.32 billion in the April-June quarter.
Its gross margin also shrank to 5 percent from 15.8 percent during the same period.
The company nonetheless remained optimistic, given improving prospects this quarter.
“We have seen signs recently that [the market is regaining] stability. We hope to see [an upward] adjustment in prices next year or in the near future,” acting chief executive Max Cheng (鄭煒順) told an investor conference yesterday.
Cheng, a former chief financial executive of AU Optronics, is serving as acting chief executive after CEO Chen Lai-juh (陳來助) was barred from leaving the US because of a price-fixing probe.
“We are not pessimistic about this quarter because inventory build-up in the US and Europe means that [customers are] looking forward to [Christmas] holiday sales,” company executive vice president Paul Peng (彭雙浪) said.
This quarter, factory usage is expected to improve to 85 percent, the panel maker said.
Shipments of TV and computer panels are expected to grow by 3 to 5 percent quarter-on-quarter from the 28.7 million units shipped in the third quarter, the company said.
However, the average selling price (ASP) could drop further this quarter from US$792 per square meter last quarter, Peng said, adding that a slight rebound in PC display panel prices would not be enough to offset the decline in TV panel prices.
Last quarter, PC panel ASP sank 20 percent quarter-on-quarter, while TV panel ASP slid 1 percent.
“As the utilization rate remains relatively low and prices could drop further, AU Optronics’ bottom line will be little changed this quarter,” said an analyst, who declined to be named. “The fourth quarter should be the bottom. The issue now is whether the recovery will be U-shaped, or V-shaped.”
Revenues decreased 3.3 percent to NT$124.4 billion in the third quarter, from NT$128.59 billion in the second quarter, the company said earlier this month.
On an annual basis, that represented an increase of 12 percent from NT$111.24 billion.
Peng said the company was trying to improve its product portfolio by increasing shipments of higher-priced panels such as LED-backlight panels, touch panels and 3D panels to fend off a further drop in revenues.
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