Fri, Jul 27, 2018 - Page 12 News List

AUO says demand rising after poor Q2

NEW FACTORY:The company said that demand for large-sized TV panels is expected to lift the utilization rate of a plant in Taichung’s Houli District to close to 100 percent

By Lisa Wang  /  Staff reporter

LCD panelmaker AU Optronics Corp (AUO, 友達光電) yesterday said that demand is recovering as customers are rebuilding inventory ahead of the peak season in the second half of the year after overstocking cut the firm’s net profit by 87 percent year-on-year last quarter.

AUO said flat-panel inventories were close to a “healthy” level in the second quarter, as sales of televisions registered double-digit-percentage annual growth in North America, Eastern Europe and Latin America, stimulated by the FIFA soccer World Cup.

The company said it that shipments of 75-inch and 85-inch TV panels rose 20 percent during the April-to-June period, adding that the sales momentum would extend into this quarter.

“The third quarter is usually a peak season. We see strong orders from customers, especially for high-end and large-sized TV panels, because those items deliver better profits for our customers,” AUO chairman and chief executive officer Paul Peng (彭雙浪) told investors.

The company said it expects gaming PC panels to show strong growth in shipments this quarter, following a 30 percent quarterly increase last quarter.

Shipments of TV and PC panels are to increase about 5 percent quarterly this quarter, while their average selling prices would remain unchanged in US dollar terms, the company said.

Robust demand for large-sized TV panels is expected to drive the utilization rate of a new 8.5-generation plant in Taichung’s Houli District (后里) close to 100 percent, AUO said, adding that its overall factory utilization rate could remain high at 95 percent this quarter.

However, the company is concerned about the supply-and-

demand situation at the end of this year, as Chinese panelmakers’ new large-scale plants enter volume production, with the negative effect likely to last for two to three years, Peng said.

AUO reported a net profit of NT$1.25 billion (US$40.89 million) last quarter — down 87 percent from NT$9.83 billion the previous year and 71 percent from NT$4.31 billion the previous quarter — as the firm reduced output of standard TV panels and increased supply of panels for gaming notebook computers, monitors and large-size TVs.

Revenue contribution from TV panels dropped to a multi-year low of 38 percent last quarter, compared with 42 percent a quarter earlier and 49 percent a year earlier, the company said.

Average selling prices for TV and PC panels contracted by 13 percent year-on-year to US$361 per square meter, the company said.

AUO posted earnings before interest, taxes, depreciation and amortization of 13.5 percent last quarter, compared with 12 percent for South Korean rival LG Display Co, which saw quarterly losses widen to 301 billion won (US$268.5 million) last quarter from 49 billion won in the first quarter.

“We believe AUO’s strategy of pursuing more value-added products helps the company post better and more stable [financial] results,” Peng said.

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