Tue, Jul 29, 2014 - Page 13 News List

Innolux profits from TV panel demand

TIGHT MARKET:After years of being weighed down by global oversupply, the panel maker is mulling investing in capacity expansion as the demand outlook looks strong

By Lisa Wang  /  Staff reporter

Innolux Corp (群創), the world’s third-largest LCD panel maker, yesterday said that its net profit last quarter grew 19-fold over the previous quarter, and that it expects growth to continue for the remainder of the year.

Strong demand, especially for its ultra-high-definition TV panels, boosted the company’s factory utilization rate to 100 percent. There were supply constraints in the last quarter, which was a seasonally slow period, Innolux said, adding that the shortage is expected to worsen in the second half as the industry enters its peak season.

“We have seen a tightening in the supply of notebook [panels] in the early period of the second quarter, and then the supply of monitor [panels] and some TV [panels] also became tight. It was a chain reaction,” Innolux president Wang Jyh-chau (王志超) told investors. “Now, we are seeing more TV panels in short supply... Clients intend to stockpile inventories ahead of the peak season.”

“The supply constraint is not set to improve until the first quarter of next year,” Wang said.

To meet customer demand, for the first time in several years Innolux is looking into the possibility of investing capital to expand capacity, Wang said.

Innolux has budgeted NT$20 billion (US$666 million) for new facilities and equipment this year.

For years, the company stopped making huge investments in expanding capacity as chronic overcapacity hurt profitability. Instead, the company invested more on developing new technologies and improving manufacturing efficiency.

Limited by capacity, shipments of flat panels used in TVs, notebook computers and monitors would be flat this quarter, compared with last quarter’s record-high of 37.14 million units, Wang said.

Panel prices are forecast to rise slightly from last quarter on the back of rising demand for high-definition and large-screen TVs, Wang said.

“We are expanding sales of ultra-high-definition TV panels to the US and Europe because they offer a higher price premium to China,” he said.

Last quarter, net profit surged to NT$3.01 billion, or NT$0.33 per share, from NT$153 million, or NT$0.02 a share, in the first quarter.

Despite the stellar growth, last quarter’s earnings per share fell short of UBS’ expectations, which predicted that Innolux would make NT$0.52. The brokerage retained its “sell” rating on Innolux, citing potentially limited growth amid high penetration rates in the global LCD TV market.

The company’s gross margin improved to 10.4 percent last quarter from 6.4 percent in the previous quarter, backed by growth in shipments of 40-inch and larger LCD TV panels, according to the company’s financial statement. Large-sized TV panels accounted for 32 percent of Innolux’s total revenue last quarter, up from 29 percent a quarter ago.

Non-operating loss expanded to NT$2.72 billion from NT$1.14 billion, primarily because of NT$1 billion in bank loan interest payment, foreign currency loss and payments to settle anti-trust cases, the company said.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top