Wed, Feb 22, 2012 - Page 12 News List

TPK posts 57 percent fall in Q4 profits

PAYING THE PRICE:The touch-panel maker attributed the decline to a one-time loss incurred from a 20 percent stake it purchased in Cando Corp in July last year

By Lisa Wang  /  Staff Reporter

TPK Holding Co Ltd (宸鴻), which counts Apple Inc as its No. 1 touch-panel client, yesterday said its net income fell nearly 57 percent in the fourth quarter, which it attributed to a NT$1.06 billion (US$34 million) one-time impairment loss from a newly acquired touch sensor subsidiary.

Net income plunged to NT$1.53 billion, or NT$5.97 a share, down from NT$3.63 billion, or NT$14.84 a share, in the previous quarter.

The figure is a 29.2 percent decrease from NT$2.17 billion in the fourth quarter of 2010.

“Without the impairment charge, net profits will improve significantly this quarter,” company financial executive Freddie Liu (劉詩亮) told investors.

Operating margins would rebound by 1 percentage point from 8.3 percent last quarter, Liu added.

TPK bought a 20 percent stake in loss-making Cando Corp (達鴻) in July last year for NT$5.58 billion.

According to Liu, revenues will shrink this quarter by 10 percent to 13 percent compared with revenues of NT$45.48 billion in the fourth quarter, during which 73 percent of the firms’ income came from small touch panels and modules, largely used for smartphones.

“The first quarter will outperform seasonal trends as one of our major customers is set for a massive shipment of a new product in the next one or two months, which will greatly offset the decline in shipments caused by some customers’ product adjustments,” Liu said.

TPK plans to spend NT$12 billion — about half of last year’s NT$26 billion budget — on new equipment this year to primarily build capacity for its new touch-on-lens technology, which TPK touts as its major weapon to fend off competition from in-cell touch panel technology, which is currently under development, in the race to make thinner touch screens.

TPK said it is scheduled to produce touch panels using its new technology in July.

Liu said the new technology will help boost gross margins because of a price premium and a lack of competition. Gross margins contracted to 13.9 percent last quarter, down from 17.3 percent in the third quarter of last year and 16.4 percent the previous year.

This year, TPK aims to expand its customer base to 40 companies, up from last year’s 30, by diversifying and entering the market for Ultrabook computers, digital cameras and other segments, company president David Sun (孫大明) said.

Sun also said the company plans to hold an annual shareholders’ meeting in May to discuss the management’s dividend proposal to set the payout ratio at 10 percent of the firm’s annual net profits and to deliver 10 percent in cash dividends.

During last year’s shareholders’ meeting, TPK did not propose a cash dividend payment, which attracted criticism from some shareholders since the company had made NT$4.72 billion in net profits, or NT$21.97 per share, in 2010.

The company just delivered a 5 percent stock dividend based on its 2010 net profits.

TPK’s net income grew nearly 1.4-fold to NT$11.34 billion, or NT$46.12 a share, from a year ago. Revenues spiked to NT$143.37 billion last year, up from NT$59.6 billion.

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