E Ink Holdings Inc (元太科技), the world’s No. 1 supplier of e-paper displays, yesterday said that revenue this year would be little changed from last year’s NT$15.2 billion (US$494 million), as growing uptake of electronic shelf labels and e-notebooks would offset a slump in e-reader demand.
E-reader customers this year are adjusting their product portfolios to changing demand, but the rough transition is cutting demand for e-paper displays, the Hsinchu-based company said.
E Ink supplies e-paper displays for Amazon.com Inc’s and Rakuten Kobo Inc’s e-readers. E-paper displays used in e-readers and e-notebooks made up 70 percent of E Ink’s total revenue in the first half of this year.
“We still believe e-readers are a business with consistent growth. This year is an exception. Next year, the e-reader market will resume high-speed growth as experienced over the past few years,” E Ink president Johnson Lee (李政昊) said at an investors’ conference.
To reach its revenue goal, E Ink has to achieve a combined revenue of NT$8.69 billion in the third and fourth quarters, after making NT$6.51 billion in the first half of the year, and the company counts on rapidly growing demand for its electronic shelf labels and e-notebooks to support revenue growth.
“The use of electronic shelf labels is spreading to [major] retailers from grocery stores,” Lee said.
For the first time, “the consumption of e-paper displays will surpass that of e-readers this year in square-meter terms,” Lee said.
“We are optimistic about the electronic shelf labels’ growth rate,” Lee said, declining to answer an analyst’s question about the 20 to 30 percent annual growth previously forecast by E Ink.
China sales would see robust growth this year, despite slower store expansion by an Alibaba Group Holding Ltd (阿里巴巴)-funded Chinese supermarket chain, E Ink said.
Chinese retailers last year followed their peers in the US and Europe in adopting electronic shelf labels, E Ink said.
E-paper displays used in electronic shelf labels made up about 17 percent of the company’s total revenue last year.
The company also expects to see annual growth in shipments of e-notebooks in China, as some local governments have restricted schools from using tablets out of concern for children’s eyesight.
With new colored e-paper displays to be available by the end of this year, E Ink said it expects e-notebooks to be a new growth driver next year.
The company expects gross margin to rebound in the second half of this year, bringing its full-year gross margin close to last year’s 41.32 percent, it said.
Royalty income, an important contributor to the firm’s profits, this year would be flat from last year’s NT$2.6 billion, E Ink said.
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