AU Optronics Corp (AUO, 友達光電) is expected to remain profitable throughout this year on the back of falling operating losses from facility depreciation and amortization, according to a local research firm.
IBT Securities Investment Consulting Co (IBT, 台灣工銀證券投顧 ) said in a report that the flat-panel maker has made efforts to assign provisions to cover facility depreciation and amortization, a move which has significantly improved the company’s financial structure.
IBT expects AUO will complete depreciation and amortization of three of its flat-panel production sites this year and next year so that its financial structure will be strengthened further.
The report put AUO’s depreciation and amortization costs for this year at NT$58 billion (US$1.91 billion), down from the NT$64 billion recorded last year.
The panel maker could continue to make a profit this year with earnings per share (EPS) reaching up to NT$0.73, the report said, extending its momentum from last year, when its EPS stood at NT$0.45.
Last year, AUO turned a profit as the global flat-screen industry hit a turning point following large losses in the previous two years.
AUO incurred NT$6.94 in losses per share for 2011 and NT$6.19 for 2012 on a global supply glut.
As several 8.5th-generation plants in China are scheduled to begin operations over the next few years, many market analysts worry that AUO and domestic rival Innolux Corp (群創光電) will face a supply increase particularly in larger screens, squeezing their bottom lines.
In its positive forecast, IBT said that it expects that only three production lines at 8.5th-generation plants in China will become operational this year. The company added that this would limit the downward pressure on pricing at Taiwanese firms and allowing AUO to stay in the black for the time being.
It predicted that AUO will feel the pinch from slow season effects in the first quarter, when it could see consolidated sales fall at a double digit pace from the fourth quarter revenue of NT$102.7 billion. AUO’s screen shipments of large screens for the first quarter were predicted to fall 5 percent to 10 percent from the fourth quarter last year.
Shipments of small and medium-sized panels for the first quarter could fall more than 10 percent from a quarter earlier.
Despite the shipment decline, the firm’s average selling price (ASP) is expected to fall slightly or even stay flat in the first quarter due to an improvement in the manufacturer’s product portfolio, IBT said.
AUO said that the ASP for the fourth quarter fell to US$551 per square meter from the third quarter’s US$606.