E Ink Holdings Inc (元太科技) yesterday reported that its net profit plunged 82 percent sequentially in the first quarter as heavy foreign-exchange losses undermined its bottom line.
Net profit plummeted to NT$157 million (US$5.22 million) last quarter from NT$891 million in the fourth quarter of last year.
The world’s largest e-paper display supplier booked foreign-exchange losses of NT$394 million last quarter, compared with gains of NT$469 million in the previous quarter.
E Ink lost NT$272 million in the first quarter of last year, mostly due to losses from its South Korean LCD subsidiary.
“An overshoot in the New Taiwan dollar against the US dollar in the first quarter had been a drag on the company’s financial performance,” Ricky Tsai (蔡昀叡), a financial director at E Ink, said at an earnings conference.
The company swung into an operating profit of NT$45 million last quarter, from an operating loss of NT$48 million in the previous quarter, Tsai said.
Gross margin edged up to 38.72 percent last quarter from 37 percent in the final quarter of last year, company data showed.
Tsai attributed the improvement to increased shipments of higher-margin products, including e-paper displays for e-readers and electronic shelf labels.
He expects gross margin in the first half to exceed the 35 percent posted in the same period last year.
Revenue should also increase from NT$6.09 billion in the first half of last year, he said.
Revenue contribution from low-margin LCD panels fell to 3 percent last quarter and should drop to a minimal figure this quarter before reaching to zero in the second half, Tsai said.
Royalty income, which rose 5 percent year-on-year to NT$411 million in the first quarter, is expected to grow at a stable pace in the first two quarters on an annual basis, he said.
First-quarter’s increase helped boost the company’s cash position to about NT$8.05 billion at the end of March, up 3.2 percent from NT$7.8 billion a year earlier.
Royalty income will continue to be a cash cow for the company, he said.
To better utilize its cash, E Ink does not rule out investing in strategic partners, or forming joint ventures to help build a better supply chain for its e-paper display business, he said.
Last month, the company formed a joint venture with Sony Solutions Corp to develop new e-paper technologies and to explore new e-paper applications.
E Ink has also formed a strategic partnership with Japan Display Inc to develop high-resolution e-paper displays for smartphones and other devices by leveraging the Japanese firm’s LTPS technology.
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