E Ink Holdings Inc (元太科技), the world’s biggest e-paper display supplier, is bracing for a headwind in the first half of this year due to dwindling demand and excessive stockpiles, it said yesterday.
E-paper displays for e-readers and new e-notebooks constituted 70 percent of E Ink’s overall revenue last year, totaling NT$15.2 billion (US$521.58 million).
“We expect the e-reader segment to weaken amid a slack season. Moreover, clients are transitioning to new models, which is digesting inventories,” company chairman Frank Ko (柯富仁) told an investor teleconference. “We are conservative about the outlook for shipment figures of e-paper displays for e-readers.”
Ko forecast that e-notebooks and electronic shelf labels would be the bright spots, with e-paper displays for those two categories showing annual growth in the first two quarters of this year as customers launch more products to take advantage of an uptake of those applications.
E-paper displays used in electronic shelf labels made up about 17 percent of the company’s total revenue last year, E Ink said.
Chinese retailers — such as a new supermarket funded by Alibaba Group Holding Ltd (阿里巴巴) — last year joined their peers in the US and Europe in adopting electronic shelf labels, the company said.
E-paper displays for e-notebooks are to grow substantially this year given last year’s lower comparison base, it said, adding that the company began supplying e-paper displays for clients in the third quarter of last year and expects to increase shipments this year.
To cope with growing customer demand, E Ink said it plans to increase its capital spending this year, compared with NT$440 million last year.
Royalty income is to remain stable at an average of NT$2.4 billion this year, from NT$2.6 billion last year, it said.
Gross margin is to hold steady or drop slightly in the first six months of this year, compared with 39.5 percent for the same period last year, Ko said, adding that the decline could be attributed the a strong New Taiwan dollar, higher raw material costs and unfavorable product portfolios.
E Ink registered 42.1 percent gross margin for the final quarter of last year, bringing it to 42.88 percent in the second half of last year.
The company posted a loss of NT$50 million in the fourth quarter of last year, from a profit of NT$1.17 billion in the previous quarter and a profit of NT$891 million for the previous year.
E Ink said a foreign-exchange loss of NT$461 million and a loss of NT$516 million from bankrupted Hydis Technologies Co were behind the weak earnings.
E Ink no longer needs to book any losses from the South Korean subsidiary as it has settled lawsuits with the labor union at Hydis and has disposed of all the firm’s equipment and facilities, it said.
For the whole of last year, E Ink saw net profit increase 8.9 percent to NT$2.08 billion, from NT$1.91 billion the previous year. Earnings per share rose from NT$1.69 to NT$1.85 and foreign-exchange losses swelled to NT$671 million.
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