AU Optronics Corp (友達光電), the nation’s No. 2 LCD panel maker, yesterday posted a wider-than-expected quarterly loss because of weak prices and higher costs stemming from a slower-than-expected move to new technology, diminishing the chances of a return to the black by the end of the year.
The improvement “in the bottom line would be more significant” in the current quarter than last quarter, driven by seasonal high demand, AU Optronics president Paul Peng (彭雙浪) said yesterday.
Subsidies on energy-efficient TVs and the Oct. 1 shopping season in China, coupled with Christmas shopping, would stimulate demand in the second half of the year, Peng said.
“We still expect the peak season to arrive, but it may not be as strong as in the past,” Peng said.
Losses improved to NT$12.46 billion (US$413 million) in the quarter ending June 30, including an additional US$208 million outlay to settle two anti-trust lawsuits in the US, compared with a loss of NT$13.8 billion in the first quarter, according to the company’s financial statement.
A ruling on a price-fixing lawsuit is expected to be made in the next few months, the panel company said. A year ago, AU Optronics posted a smaller loss of NT$10.77 billion.
“The quarterly results fall short of most analysts’ expectations ... Most people expected the loss would narrow to NT$10 billion,” Oriental Securities Investment Advisory Co (亞東證券投顧) analyst Stanley Lin (林其範) said.
Lin estimated AU Optronics would lose just NT$8.4 billion.
“The worse-than-expected second quarter makes it more unlikely that AU Optronics can return to profit this quarter,” Lin said.
“[It was the] worst period for the LCD industry, as the downcycle was the longest in the industry’s history ... AU Optronics’ bottom line will improve gradually,” Peng said.
This quarter, shipments of PC and TV flat panels would hold steady, compared with 31.7 million units shipped in the second quarter, as factory loading rates would rise slightly to just under 85 percent from 80 percent, the company said.
A nearly month-long production suspension at a factory in Taoyuan County was part of the reason behind the slow improvement in factory utilization after an earthquake hit northern Taiwan on June 13, Peng said.
Prices for PC and TV panels are expected to rise by a low single-digit percentage quarter-on-quarter in the July-to-September period from US$643 per unit last quarter, following a 1 percentage point quarterly decrease from US$649 in the first quarter.
AU Optronics hopes to raise prices for 42-inch and 50-inch TV panels because of tight supply.
The firm said it has put back the mass production of smartphone panels on advanced AMOLED technology to this quarter from last quarter.
The company was scheduled to send samples of 50-inch AMOLED panels to customers at the end of this year, he said. At the same time, the company would send new touch panels to be used in tablets and Ultrabooks, he said.
In the initial stages, a lower yield rate and utilization rate have increased costs and eroded profits, he said.
On potential strategic partnerships, Peng said the company has exchanged opinions with interested investors about a plan to sell 800 million common shares via a private placement. AU Optronics customers were among those interested in subscribing, Peng said.
AU Optronics is also seeking a strategic partnership to complement the company’s long-term development, Peng said.