Wed, May 07, 2014 - Page 14 News List

Innolux sees profit despite slow season

UNAFFECTED BY WEAKNESS:The company saw a rise in shipments which offset a decline in the average selling price of TV and PC panels caused by slumping demand

By Lisa Wang  /  Staff reporter

A model in Taipei on April 24 sits by a 65-inch high color gamut 4K2K LCD TV module made by Innolux Corp that won a Taiwan Excellence Silver Award.

Photo courtesy of Innolux Corp

Innolux Corp (群創光電), the nation’s largest LCD panel maker, swung into profit last quarter as increased shipments of high-margin products and stringent cost management offset the impact of seasonal weakness, a company executive said yesterday.

In the quarter ended on March 31, Innolux made NT$153 million (US$5.07 million) in net income, after it lost NT$1.34 billion in the final quarter of last year.

The company joined local rival AU Optronics Corp (友達光電) in posting good results for last quarter, while larger rival LG Display Co drifted into a quarterly loss on seasonal factors.

Gross margin improved to 6.4 percent last quarter from 5.1 percent a quarter ago.

A rise in shipments of high-margin panels absorbed a 4.72 percent sequential decline in the average selling price (ASP) of TV and PC panels because of slumping demand for TV panels.

“Innolux’s results are better than expected, as most analysts expected Innolux would make a loss again in the first quarter,” MasterLink Securities Investment Advisory Co (元富投顧) analyst Henry Yen (顏志龍) said.

For this quarter, Innolux expects business to pick up on the back of restocking demand for TV, PC and mobile phones panels.

“Generally speaking, the first quarter is the bottom,” company president Wang Jyh-chau (王志超) said in a conference call yesterday.

“We are seeing significant progress in shipments and ASP both in the large-sized and small and medium-sized [segments] compared with the first quarter,” Wang said.

Wang said demand in China this year looked sustainable as TV sales in China during this month’s Workers’ Day shopping season only dropped 10 percent annually, a slower decline than the 20 percent contraction in the first three months of this year.

The growth moment was reflected in last month’s revenue, which rose 2.3 percent to NT$38.19 billion from March’s NT$37.32 billion, according to a company statement released yesterday.

Revenue from small and medium-sized panels set an all-time high last month as the company allocated more capacity to make higher-margin smartphone panels, Wang said.

However, shipments of those panels fell 4.3 percent month-on-month to 28.67 million units,

Wang added.

Talking about the company’s outlook for the ultra-high-definition 4K2K TV market, Wang said Chinese customers set a much more aggressive target of 30 percent penetration, compared with the global market’s 9 percent.

Innolux expected 20 percent to 30 percent of its overall TV shipments to be 4K2K TV panels, he said.

However, he downplayed the adverse impact of Samsung Electronics Co’s and LG Display Co’s sales of low-cost 4K2K TV panels in China.

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