TPK Holding Co (宸鴻), which supplies touch panels for Apple Inc’s iPhones and Apple Watches, yesterday said it turned a profit for the second quarter in a row, as a substantial asset disposal gain helped stem operating losses during the traditionally slow season.
Net profits plunged 57 percent to about NT$296 million (US$9.61 million) in the quarter ended Dec. 31 last year, compared with NT$684 million in the previous quarter, a company financial statement showed.
However, the company last quarter swung into an operating loss of NT$45 million from operating income of NT$1.27 billion the previous quarter.
The operating loss was offset by a non-operating gain of NT$564 million, the statement said.
Gross margin sank to 5.5 percent last quarter from 9.6 percent the previous quarter.
The company cited weaker-than-expected demand for smartphones and wearable devices, which reduced factory utilization, and lowered prices for last quarter’s financial results.
Over the past two years, TPK has been struggling to turn around its touch panel business via streamlining its customer portfolios and product line-ups, recouping smartphone touch panel orders from Apple Inc.
Last quarter, half of TPK’s revenue came from Apple, the company said.
Yesterday, TPK said it can see “the light at the end of the tunnel.”
“TPK’s operations hit the bottom in 2016. We expect to see a significant improvement this year,” TPK chief executive officer Michael Chung (鍾依華) told investors during a teleconference yesterday.
“Numerous new products will enter the markets this year, providing robust growth momentum for the company,” Chung said.
The new products are ramping smoothly, with yield rates making good progress, he said.
TPK stumbled in the second quarter last year by incurring a quarterly loss of NT$2.5 billion after failing to boost yield rates for making touch panels used in wearable devices to a profitable level.
TPK aims to turn a profit in each quarter throughout the year, Chung said, adding that revenue is expected to increase each quarter.
The company expects revenue this quarter to exceed the NT$21.24 billion in the same period last year.
If that is realized, TPK will see less than a 10 percent decline this quarter from NT$24.7 billion, TPK chief financial officer Freddie Liu (劉詩亮) said.
That will help lift TPK’s operating margin back to positive territory at 1 percent, Liu said.
He said he also expects a sizable contribution from new asset gains this quarter.
“The seasonal effect in the first quarter will be smaller this year than in previous years,” Liu said. “Tablets and two-in-one computers will become the major growth drivers for TPK, as clients are to launch new models in the first half of the year.”
In the second half, smartphones would overtake tablets and PCs as the company’s main driving force, Liu said.
Apple is expected to unveil its new iPhone in September.
TPK plans to boost capital expenditures this year by 68 percent to NT$4.7 billion from last year’s NT$2.8 billion to finance the production of a 3D touch sensor, which is reportedly to be used in Apple’s new iPhones.