Touchpanel supplier TPK Holding Co (宸鴻) yesterday posted its first quarterly net loss due to a one-time asset impairment charge of NT$2.39 billion (US$78.93 million) last quarter.
For this quarter, TPK forecast that sales would decline 40 percent from the NT$41.88 billion posted last quarter due to seasonal factors — a fall that would be much bigger than analysts’ estimates.
“The guidance is shocking,” Yuanta Securities Co (元大證券) analyst Rainy Wang (王雨涵) said, citing consensus forecasts of a decline of between 20 percent and 25 percent.
TPK shares closed down 2.96 percent at NT$180.50 yesterday, ahead of the release of the company’s financial results and sales guidance.
TPK swung into a net loss of NT$1.6 billion, or loss per share of NT$4.88, last quarter from a net profit of NT$1 billion in the previous quarter and NT$5.32 billion a year ago.
Without the asset impairment, the company said it would have posted a net profit of NT$782 million, or NT$2.37 per share, last year.
Nonetheless, the impact of decreased sales of touchpanels used in smartphones and tablets still drove down the company’s full-year net profit to NT$7.18 billion, just half of the previous year’s NT$14.36 billion, chief financial officer Freddie Liu (劉詩亮) told an investors’ conference.
Earnings per share were NT$21.21 last year, compared with NT$43.89 in 2012.
“We may face quite a lot of headwinds before the second quarter ends,” Liu said.
“The company’s business performance should get back on track during the second half of the year with new product launches by customers,” he added.
With the smartphone market becoming saturated, TPK plans to offer more diversified products for various applications, including one-glass-solution touchpanels for high-end smartphones and silver nanowire-based items for mid or entry-level models.
The company, mainly known as a touchpanel supplier for Apple Inc’s iPads, will also ship touchpanel products to more than five Chinese smartphone makers this year, as part of its efforts to broaden its customer base and expand its market share in the mid and entry-level smartphone segment.
Last year, orders from Apple accounted for 43 percent of TPK’s total sales, down from a 59 percent share in 2012, whereas orders from Chinese smartphone vendors contributed 7 percent.
TPK president Tom Sun (孫大明) said the company might include touchpanels used in wearable devices in its product portfolio this year, in response to investors’ questions of whether TPK plans to mass produce smartwatch-like touchpanels for Apple.
To reduce its operating expense, which reached NT$2.84 billion last quarter, TPK plans to cut senior executives’ salaries by 20 percent and director-level staff by 10 percent this year.
However, the company will raise front-line employees’ salaries by 3 percent this year in accordance with the company’s employee reward program, he added.
Sun said TPK would return to profit this quarter, as “the company’s earnings performance had bottomed out last quarter.”
The firm plans to allocate a capital expenditure of NT$15 billion for this year, which is 33 percent lower than the NT$22.4 billion budgeted for last year, Liu said.
Up to 60 percent of the planned spending, about NT$900 million, will be used to build the company’s new plant in Pingtan in China’s Fujian Province, he added.