AU Optronics sees bleak fourth quarter due to seasonality

WINDING DOWN::After another profitable quarter, the panel maker is widely expected to slide back into the red because of slackening global demand

By Lisa Wang  /  Staff reporter

Thu, Oct 31, 2013 - Page 13

AU Optronics Corp (AUO, 友達光電), the nation’s No. 2 LCD panel maker, yesterday forecast a lackluster fourth quarter due to seasonality after reporting better-than-expected third-quarter profit as it shipped more higher-margin TV and smartphone panels.

Net profit plunged 37 percent to NT$2.51 billion (US$85 million) last quarter, compared NT$3.98 billion in the second quarter, the company’s financial statement showed.

AUO lost NT$16.6 billion in the third quarter of last year.

The third-quarter figure surpassed JPMorgan’s forecast of NT$1.6 billion and consensus estimates of NT$2.5 billion, according to a JPMorgan report released early this month.

However, business prospects for this quarter are bleak, the Hsinchu-based panel maker said, forecasting slack seasonal demand and reinforcing most analysts’ belief that the firm would drift into a quarterly loss again after two quarters in the black.

“Overall speaking, the fourth quarter is a slow season for information technology products, and for the small and medium-sized panels segment,” company president Paul Peng (彭雙浪) told an investors’ conference.

Inventory demand from China for the new year shopping season would not begin until December, Peng said.

“We will flexibly adjust [equipment] loading rate in line with the seasonal slowdown,” he said, forecasting especially weak demand for PC panels.

Shipments of PC and TV panels are expected to drop by a high-single digit percentage point this quarter from last quarter’s 29.3 million units, AU Optronics said.

Price falls will be moderate, after the average selling price slid 3.04 percent last quarter to US$606 per square meter from US$625 in the previous quarter, the company said.

Shipments of panels used in smartphones and other mobile devices are expected to drop by more than 10 percent this quarter from 44.1 million units last quarter, it added.

“We still think AUO will make a loss this quarter if its utilization rate drops further. We have not heard anything from AUO that might change our view,” an analyst who tracks the LCD industry for a foreign brokerage said, speaking on condition of anonymity.

AU Optronics is expected to post a loss of NT$1.77 billion this quarter and another unprofitable quarter in the first three months of next year, the analyst said.

Nonetheless, Peng said AU Optronics plans to expand production of ultra-high-definition, or 4K2K, TV panels to include more affordable models such as 42-inch screens and to broaden its customer base to cover TV makers in China, South Korea and the US.

The company also aims to ship more mid and high-end panels for mobile phones this quarter, he said.