Wed, May 04, 2011 - Page 12 News List

Chimei Innolux losses narrow in first quarter

POTENTIAL TO REVERSE:The company also managed to improve its gross margin to minus 5.3%, leading it to say that things could continue to improve next quarter

By Lisa Wang  /  Staff Reporter

Chimei Innolux Corp (奇美電子), the nation’s top LCD panel maker, yesterday posted its third consecutive quarterly loss as TV panel prices continued to drop, placing the firm in a similar position to its rivals, who are all suffering sluggish demand for flat-panel TVs in Europe amid the eurozone’s unresolved debt crisis.

Quarterly losses narrowed to NT$13.8 billion (US$48 million) in the first quarter, compared with NT$24.13 billion in the final quarter of last year, which included a provision of NT$6.7 billion for an anti-trust penalty after the European Commission fined the company 300 million euros (US$443 million) for alleged price-fixing.

“The improvement is smaller than I expected,” said Roger Yu (游智超), who tracks the LCD industry for Polaris Securities Co (寶來證券).

“Chimei and its local rivals were hit by disappointing demand for LED TVs in the first quarter as it is not persuasive for consumers to spend 20 percent or 30 percent more on a TV with only a thinner screen,” Yu said.

The Miaoli-based panel maker said “there is a chance for the company to further improve its operation next quarter.”

The panel maker did not offer a second-quarter outlook.

Chimei, an entity formed by a three-way merger between Innolux Display Corp (群創光電), Chi Mei Optoelectronics Corp (奇美電子) and TPO Display Corp (統寶光電) in March of last year, attributed the improvement last quarter to greater cost savings through internal supply chain integration and greater factory utilization.

In March, Chimei chief executive Tuan Hsing-chien (段行建) blamed slower-than-expected integration for the company’s -disappointing fourth quarter and he expected the positive impact to amplify next quarter.

Gross margin improved to minus 5.3 percent last quarter, from minus 7.6 percent in the prior quarter, the company’s financial statement showed.

Margin on earnings before interest, depreciation and amortization increased to 9.3 percent from 4.7 percent during the same period, higher than the 8.8 percent posted by local rival AU Optronics Corp (友達光電).

Factory usage also increased to as high as 80 percent last quarter from about 70 percent in the previous quarter, company spokesman Eddie Chen (陳彥松) said by telephone.

In the first quarter, the average selling price of TV and PC panels rebounded 2 percent to US$101 per unit last quarter from US$99 per unit a quarter ago, reversing a decline of 12.8 percent in the fourth quarter of last year.

Revenues decreased 4.6 percent in the first three months to NT$124.33 billion, with TV panels accounting for 37 percent and panels used in handsets and tablets contributing 23 percent, up from 35 percent and 22 percent in the previous quarter respectively.

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