E Ink Holdings Inc (元太科技), which supplies e-paper displays for Rakuten Kobo Inc’s e-reader series, yesterday reported a 35 percent sequential decline in net profit for last quarter, mainly due to a reduction in royalty fees.
Net income shrank to NT$509 million (US$15.97 million) last quarter, compared with NT$780 million in the prior quarter. Earnings per share dropped to NT$0.45 from NT$0.68.
However, operating income grew more than 2.5-fold to NT$432 million in the third quarter from NT$171 million in the second quarter. That marked the second straight quarter that E Ink reported an operating profit.
However, a slump in non-
operating income dragged down E Ink’s bottom line.
Non-operating income dipped almost 80 percent to NT$178 million last quarter from NT$879 million a quarter earlier, because of lower patent royalty income and asset impairment due to the New Taiwan dollar’s appreciation versus the world’s major currencies.
For the full year, E Ink expects royalty fees — a swing factor on its bottom line — to tumble between 15 and 20 percent annually, a bigger contraction than the company’s previous estimate of 10 to 15 percent, E Ink chief financial officer Lloyd Chen (陳樂群) told investors.
The company last year booked NT$3 billion in royalty income by licensing high-resolution fringe-field-switching LCD manufacturing technology to LCD panel makers. The technology was developed by its South Korean subsidiary Hydis Technology Inc.
Commenting on the company’s core businesses, Chen said that revenue this quarter would grow between 10 and 15 percent year-on-year to between NT$3.08 billion and NT$3.22 billion, from NT$2.8 billion in the fourth quarter last year.
That implies a quarterly contraction of between 27 and 31 percent from last quarter’s NT$4.44 billion, as shipments of e-paper display for e-readers taper off as the Christmas shopping spree draws to a close.
Gross margin is expected to shrink to about 35 percent this quarter from last quarter’s 38.14 percent, Chen said.
E Ink also said it expects revenue next year would entirely come from selling e-paper displays, as it is exiting the LCD market.
E-paper displays used in e-tags for luggage and shelf labels for retailers would become the company’s growth drivers in the next few years, Chen said.
Luggage maker Rimowa has introduced electronic luggage tags that use E Ink’s e-paper displays. E Ink’s e-paper displays are also used by some retailers for their shelf labels, replacing traditional paper labels.
E Ink said it is now focusing on developing bigger-sized e-paper displays, color e-paper displays and flexible e-paper displays to expand its markets.
As part of its LCD exit, E Ink shut down its Hydis factories in South Korea last year.
This year, it is revamping a local LCD plant, which will be streamlined and transformed into an e-paper display research and development plant.
LCD panels accounted for only about 10 percent of E Ink’s revenue last quarter, while e-paper displays for e-readers made up 70 percent, the company said.
E Ink shares climbed 0.42 percent to NT$23.75 yesterday, outperforming the TPEx’s 0.07 percent gain.
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