Lextar Electronics Corp (隆達電子), an LED manufacturing arm of AU Optronics Corp (友達光電), yesterday said its net profit last quarter declined 41.5 percent to NT$176 million (US$5.98 million) from NT$300.6 million in the previous quarter.
Earnings per share were NT$0.35 last quarter, down from NT$0.59 in the sector quarter, the company said in a filing to the Taiwan Stock Exchange.
On an annual basis, net profit grew 67.6 percent from NT$105 million, or NT$0.25 per share, in the third quarter last year.
Lextar, which makes LED chips and lighting items, said its gross margin declined 2.43 percent to 15 percent from 17.43 percent the previous quarter, but was still 2.6 percentage points higher than 12.4 percent the previous year.
Third-quarter revenue was NT$3.696 billion, down 3.9 percent from the previous quarter, but 27.7 percent higher than last year’s level, the company added.
Credit Suisse analysts Derrick Yang (楊泓極) and Jerry Su (蘇厚合) said in a client note ahead of the company’s report on its results that Lextar’s revenue and gross margin would suffer from sluggish demand for large backlighting and pricing pressure from its Japanese customers.
“The weaker-than-expected performance last quarter was mainly due to Chinese backlight clients’ inventory adjustments and a rapid replacement of notebook computers by tablet devices,” Lextar chief financial executive Chang Bo-yi (張博儀) said in a statement on its Web site.
Chang said that continued pricing competition in the lighting market last quarter caused pressure on Lextar.
However, improved resource allocation and cost reduction initiatives had enabled the company to keep its days of inventory steady at 64 days in the third quarter — the same level as in the prior quarter, he added.
Lextar said it expects its revenue to decline sequentially in the slow season this quarter, without elaborating.
Based on Credit Suisse’s forecast, the company’s revenue could drop 9.69 percent to NT$3.7 billion from last quarter and its net profit would likely be halved to NT$138 million this quarter.
Chang said the company expects to see synergy benefits from its acquisition of smaller domestic peer Wellypower Optronics Corp (威力盟) next year.
Wellypower provides LED chip packaging and LED lighting for small brands, as well as making LED backlighting for notebook computers. The company was merged into Lextar in February through a share-swap deal to help strengthen the latter’s edge in the competitive LED market.