Fri, Aug 09, 2013 - Page 13 News List

Innolux posts strong quarterly net profit

DISPLAYING SUCCESS:The LCD panel maker attributed the growth to an increase in shipments of bigger TV panels and higher-margin products such as tablet panels

By Lisa Wang  /  Staff reporter

Innolux Corp (群創光電), the world’s fourth-biggest LCD panel maker, yesterday posted a stronger-than-expected quarterly net profit for last quarter after its gross margin hit the highest level in three years, but it gave a lackluster outlook for the current quarter amid increasing inventory.

As demand from Chinese TV makers slumped after Beijing’s TV purchase subsidy program ended in May, Innolux is pinning its hopes on demand for inventory buildup ahead of China’s shopping season in October.

The company bears the brunt of the Chinese government’s policy change as it holds the largest market share in China.

“The third quarter will not be as strong as it was in past years as stockpile [of TV panels] rose [beyond normal levels] in China,” Innolux president Wang Jyh-chau (王志超) told investors. “The third quarter will be a flat quarter.”

Shipments of LCD TV panels are expected to remain flat or to increase by a low-single-digit percentage point this quarter, from 37.75 million units last quarter, the company said.

Average selling prices are likely to rise by a high-single digit percentage sequentially this quarter, the company said.

“The third-quarter guidance does not look good. We are worried about the increase in inventory as [Innolux’s] customers could become more conservative about ordering,” a senior industry analyst said. The analyst was requested not to be named.

Net income was NT$4.07 billion (US$135.8 million) in the April-to-June quarter, compared with NT$1.68 billion in the first quarter, the company’s financial statement showed.

That marked the second profitable quarter for the company. Innolux lost NT$9.57 billion in the second quarter last year.

Gross margin improved to 12.4 percent last quarter, from 7.7 percent in the prior quarter and minus-1.7 percent in the same period last year.

The company attributed the improvement to an increase in shipments of bigger TV panels and high-margin products such as tablet panels.

However, non-operating loss swelled to NT$3.82 billion last quarter from NT$1.61 billion in the first quarter, primarily due to charges reserved for ongoing anti-trust cases, according to Innolux.

The company’s revenue dropped 4.1 percent last month to NT$31.78 billion from June’s NT$33.14 billion and plunged 20.1 percent from NT$39.8 billion a year earlier, Innolux said in a filing to the Taiwan Stock Exchange.

In comparison, rival AU Optronics Corp (友達光電) saw revenue shrink 10.8 percent month-on-month but rise 4.1 percent year-on-year to NT$33.03 billion last month.

Separately, the recent shutdown of the company’s LED chipmaking subsidiary Chi Mei Lighting Technology Corp (奇力光電) has raised market concerns about Innolux’s ongoing debt negotiation with creditor banks, but the company shrugged off such worries, saying that it plans to reach agreement with creditor banks to revise terms of a loan rollover by the end of this year.

“As our financial situation has improved significantly, creditor banks are willing to renegotiate on new terms,” company chairman Tuan Hsing-chien (段行建) said.

Creditor banks of Chi Mei Lighting have requested Chi Mei Lighting’s major shareholders — Innolux and Chi Mei Corp (奇美實業) — to be placed in charge of creating a new board after all board members quit before the company’s shutdown.

The LED chipmaker has loans of NT$5.6 billion from local banks.

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