Innolux Corp (群創), the world’s third-largest panel maker, yesterday posted lower-than-expected profits for last quarter as unfavorable foreign-exchange rates dampened consumers’ purchasing power.
The company expects adverse foreign-exchange rates to impact on PC demand this quarter.
“The third quarter is usually the peak season, but it seems a bit slack due to the [weak] global macroeconomy,” Innolux president Wang Jyh-chau (王志超) told investors in a teleconference yesterday.
“However, TV panel demand is relatively strong. For some sizes, we cannot fully satisfy customers’ demand. We have had to allocate extra capacity for TV [panel manufacturing],” Wang said. “Most of our customers, including those from China, Japan and South Korea, are still trying to reach their annual business targets, despite macroeconomic uncertainties.”
As Innolux has a minimal exposure to the 32-inch panel segment, which is facing an inventory glut, the company is not subject to price erosion, Wang said, adding that the company has been differentiating its flat panels from those of its competitors to make better profits.
Last quarter, about 43 percent of flat panels shipped by Innolux were those bigger than 40 inches, while 30-inch panels only accounted for 2 percent, the company said.
Benefiting from product differentiation, average selling prices for PC and TV panels are expected to hold steady this quarter, while shipments of such panels would fall by single-digit percentage points, Wang said.
Shipments of small and medium-sized panels for mobile phones are expected to be flat this quarter from last quarter, he said.
In the second quarter, net profit plunged 37.5 percent to NT$5.41 billion (US$171 million), compared with NT$8.65 billion in the previous quarter.
Last quarter’s net profit expanded 80 percent from NT$3.01 billion the previous year, but the figure still fell short of a NT$6.98 billion forecast by Credit Suisse analyst Jerry Su (蘇厚合) and a NT$6.76 billion estimate by HSBC Securities Corp analyst Jerry Tsai.
With anti-trust charges booked, the firm’s non-operating loss worsened to NT$2.05 billion last quarter, compared with NT$1.17 billion the previous quarter, while gross margin dropped 16.6 percent last quarter due to the New Taiwan dollar’s appreciation against the greenback.
Innolux said it would maintain its capital spending at NT$35 billion this year.
Commenting on the Information Technology Agreement expanded tariff-elimination deal, which excluded panels from the list of more than 200 tariff-free IT products, Innolux chairman Tuan Hsing-chien (段行建) said there would be no impact on the company since its rivals would also have to pay the tariffs.
Tuan said it was too early to predict the impact of a free-trade agreement signed by China and South Korea as the firm’s South Korean competitors would only enjoy preferential tariffs on their exports to China in eight years.
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