E Ink Holdings Inc (元太科技), the world’s largest e-paper display supplier, yesterday reported net profit of NT$793 million (US$25.25 million) for last quarter, up from NT$100 million in the previous quarter.
The surge in net profit was supported by a spike in royalty income from a high-resolution LCD manufacturing technology that was first used in Apple Inc’s iPhone, the company said.
Non-operating income also surged about 90 percent quarter-on-quarter to NT$1.56 billion last quarter from NT$820 million, but operating loss ballooned to NT$951 million from NT$502 million, according to a financial statement released yesterday.
Consequently, operating margin worsened to minus-25.6 percent last quarter from minus-12.3 percent the previous quarter.
“We have made efforts to improve our operations... Revenues are still below [break-even] level and we still have some idle capacity. Costs are still high,” financial executive Lloyd Chen (陳樂群) said during a teleconference yesterday.
For the whole of last year, E Ink’s net profit plunged about 54 percent to NT$13 million, or earnings per share of NT$0.01, from NT$29 million, or earnings per share of NT$0.03, in 2013, after non-operating income more than doubled to NT$2.91 billion last year from NT$1.44 billion the previous year.
Most of the non-operating income came from royalty charges on high-resolution fringe-field-switching (FFS) technology licensed to LCD panel makers, including Innolux Corp (群創). The FFS technology was developed by E Ink’s South Korean subsidiary, Hydis Technologies Co Ltd.
Last year’s operating loss swelled to NT$3.24 billion, from NT$1.65 billion the previous year.
“We expect to continue to have stable royalty income, as the license contracts are not due to expire in the short term,” Chen said.
Last year, E Ink received NT$3.56 billion in royalty income, he said.
“The closure of Hydis’ plants will not affect existing royalty agreements,” he said.
Chen said Hydis’ board decided to shut down two uncompetitive factories in January. He said he expects the shutdown to curtail E Ink’s revenue in the current quarter, but for the full year the revenue reduction would be offset by growth in its e-paper business.
E-paper is the major revenue source of E Ink, which supplies e-paper displays for Amazon.com Inc’s Kindle e-readers, Barnes & Noble Inc’s Nook e-readers and Rakuten Inc’s Kobo e-readers.
E-reader shipments to North America are expected to have a compound annual growth rate of 4 percent over a four-year period to about 9.7 million units in 2018, a jump from this year’s estimate of 8.1 million units, E Ink said, citing a forecast by market researcher HIS Inc.
For E Ink, shipments of e-paper for e-readers are expected to be flat this year from last year, Chen said.
E Ink also supplies e-paper used in price tags for supermarket operators, secondary displays for mobile phones, cars, luggage tags and large pubic electronic signs at gas stations.
E Ink shares fell 0.69 percent to close at NT$14.4 yesterday, underperforming the TAIEX, which gained 0.68 percent.
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