Wed, Feb 27, 2013 - Page 13 News List

Innolux Corp posts larger-than-expected quarterly losses on trust case expenses

By Lisa Wang  /  Staff reporter

Innolux Corp (群創光電), the nation’s top LCD panel maker, yesterday posted larger-than-expected quarterly losses, as high outlays for several anti-trust cases prevented it from breaking even.

Net losses improved to NT$3.22 billion (US$108 million) last quarter, compared with a loss of NT$3.72 billion in the third quarter last year and a loss of NT$19.99 billion in the fourth quarter of 2011, according to the company’s financial statement.

The average selling price of its panels rose about 6 percent sequentially last quarter to US$89 per unit, up from US$84.

Innolux said it booked NT$6.39 billion in non-operating losses last quarter, with half of the figure, or NT$3.19 billion, allocated to settling panel price-fixing cases including the AT&T case.

"The anti-trust outlay is much higher than I thought. Without this expense, Innolux’s bottom line would have approached break-even level," Calvin Shao (邵琮淳), who tracks the LCD industry for Fubon Securities (富邦證券), said by telephone.

Shao retained his “buy” rating on Innolux as the company may benefit from increasing demand for high-resolution TV panels and growing demand from Hon Hai Precision Industry Co Ltd (鴻海精密), a major stakeholder in Innolux.

Shao estimated Innolux lost NT$1.5 billion in the final quarter of last year.

Innolux chairman Tuan Hsing-chien (段行建) told investors yesterday that there would be no further major reserves set aside for anti-trust cases.

Shao expects the panel maker to start making a profit again next quarter, helped by growing shipments of high-margin LCD TV panels delivering high resolution pictures and a healthy supply-and-demand situation.

“Toshiba Inc plans to launch new 58-inch and 65-inch high-resolution TVs soon and there is [inventory replenishment] demand from Chinese TV makers for May 1 holiday sales,” Shao said.

Innolux supplies TV screens to the Japanese TV maker.

The company reported an operating income of NT$3.14 billion for the first time in two years for last quarter. Operating profit margins rebounded to 2.4 percent last quarter from minus-1.7 percent in the previous quarter and minus-13.2 percent a year ago.

This quarter, shipments of TV and PC panels are expected to drop by low-teens percentage points from the 38.4 million units shipped last quarter, company president Wang Wang Jyh-chau (王志超) told investors.

“The first quarter will still be slack as usual, but it will be a better period than first quarters in previous years,” Wang said. “February will be the trough as demand will resume as customers start building inventory for the holiday shopping season starting on May 1 [in China].”

Weak demand for PC panels could cut into the expected 10 percent sequential growth in shipments of TV panels, the company said.

Innolux plans to ship more 4k ultra-high-definition TV panels next quarter, Wang said. These high-resolution panels enjoy better margins, the company said.

Shipments of panels used in mobile phones and tablets are expected to decrease by high single digit this quarter from last quarter’s 114 million units.

Innolux yesterday said it planned to spend NT$20 billion on new equipment this year, up 18 percent roughly from NT$17 billion last year.

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