Innolux Corp (群創), an LCD panel manufacturing arm of Hon Hai Precision Industry Co (鴻海精密), yesterday reported its first quarterly losses in about two years in the fourth quarter of last year as prices plunged due to an overcapacity-driven downcycle.
The performance heralded a challenging year for the industry and the company this year.
Downside risks are growing due to uncertainty over the global economy and increased panel supply from China, which puts pressure on prices, Innolux said.
To cope with the downturn, Innolux said it plans to optimize its production portfolio and boost product value.
The firm is also expanding into new businesses and technologies to enhance its competitiveness, it said.
During the quarter ending on Dec. 31 last year, the Miaoli-based company lost NT$700 million (US$22.7 million), down from net profits of NT$4.3 billion in the fourth quarter of 2017 and NT$1.91 billion in the third quarter of last year, a company statement said.
Average selling prices tumbled 14.37 percent to US$292 per square meter last quarter, compared with US$341 in the same period of 2017. However, prices rose from US$289 per square meter in the prior quarter.
Gross margin slid to 6.2 percent last quarter, from 14.1 percent in the same period in 2017 and 10 percent in the third quarter of last year.
Innolux last year saw its net profit dip 94 percent to NT$2.22 billion from NT$37.03 billion in 2017. Earnings per share contracted to NT$0.22 from NT$3.72.
Revenue dropped 15 percent to NT$279.38 billion, from NT$329.17 billion in 2017.
The company said it expects prices for TV panels to hit the bottom in the current quarter, which would help buoy prices for large-sized panels.
Prices for large-sized panels are to remain unchanged this quarter from last quarter, the firm said.
However, shipments of large-sized panels used in TVs and computers would fall about 15 percent sequentially this quarter, it forecast.
Flat panels used in TVs accounted for 43 percent of Innolux’s revenue last quarter of NT$72.24 billion, while panels for mobile phones and industrial devices made up about 24 percent, the statement said.
The business outlook for small and medium-sized panels, used mostly in mobile phones, is even bleaker, as the market is entering a slow season and it is saturated, it said.
Shipments of such panels could slide by a percentage in the high teens on a quarterly basis, while prices could fall about 15 percent quarter-on-quarter, the panel maker forecast.
Innolux reported NT$21.21 billion in revenue for last month, a 10 percent slide from NT$23.54 billion in December and an annual contraction of 18.8 percent from NT$26.1 billion in January last year.
Shipments of large-sized panels fell 16 percent month-on-month to 101 million units, while shipments of small and medium-sized panels slid 17 percent sequentially to 19.15 million units, Innolux said.
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