Chimei Innolux Display Corp (CMI, 奇美電子), the nation’s largest LCD panel maker, posted a loss in the third quarter as sluggish demand drove equipment utilization down to as low as 60 percent.
In the third quarter, CMI lost NT$3.64 billion (US$119 million) after the company aggressively wrote off inventories because of gloomy demand, to compare with a net profit of NT$9.54 billion in the second quarter.
CMI booked losses of NT$1 billion in the last quarter alone because the New Taiwan dollar appreciated 4 percent against the US dollar during the quarter.
Gross margins contracted to 2.8 percent last quarter after factory usage dipped to between 60 percent and 65 percent on sagging demand, financial executive Eddie Chen (陳彥松) said by telephone. CMI had its factories at full capacity in the second quarter.
In the second quarter, gross margins stood at 12.8 percent.
“This is the trough [in terms of factory utilization],” Chen said.
“We expect a significant improvement in factory usage in the fourth quarter, which will help us improve our gross margins and costs,” Chen said.
Regarding demand, he said the company “is seeing positive signs. Prices are stabilizing and we are seeing the possibility of price increases for certain models.”
The third-quarter loss was unexpected.
Roger Yu (游智超), a flat-panel industry analyst with Polaris Securities Co (寶來證券), said he “did not expect CMI would make a loss in the third quarter.”
With its LCD monitor assembling business, CMI should have posted better third-quarter earnings than its local rival AU Optronics Corp (友達光電), which eked out a net profit of NT$227 million last quarter, Yu said.
Yu had projected that CMI would break even.
This quarter, shipments of PC and TV panels should increase from the 30.6 million units last quarter, Chen said.
After a 5 percent quarterly decline, the average selling price will remain flat or rebound slightly from US$$113 per unit in the third quarter, helped by rising shipments of products with better margins, such as LED-backlit TV panels, Chen said.
TV panels accounted for the majority, 41 percent, of the company’s revenue last quarter which was NT$137.05 billion.
CMI was created from a three-way merger of Innolux Display Corp (群創光電), Chi Mei Optoelectronics Corp (奇美電子) and TPO Display Co (統寶光電) on March 18.
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