Epistar Corp (晶電) expects to swing back to profit next quarter at the earliest, as LED lighting products enter their peak season and the company continues to cut operating costs.
“It is challenging to turn profitable this quarter despite improving margin levels. We expect a bigger chance to achieve our goal in the second half of this year, possibly in the next quarter,” Epistar chairman Lee Biing-jye (李秉傑) said at the company’s annual general meeting in the Hsinchu Science Park (新竹科學園區).
Lee apologized to shareholders for reporting a net loss of NT$3.01 billion (US$92.7 million) for last year, compared with a net income of NT$2.5 billion the previous year.
For the first quarter of this year, Epistar stayed in negative territory, with a net loss of NT$1.64 billion and a gross margin of minus-7.34 percent, according to the company’s filing with the Taiwan Stock Exchange.
Lee attributed the poor showing to a supply glut of LED lighting chips and weak demand for backlight units used in TVs, which dragged down the average selling prices of LED chips and weighed on LED upstream and downstream suppliers’ profitability.
Given that the Chinese government is still offering subsidies for Chinese LED manufacturers, Lee said the oversupply is unlikely to ease significantly this year.
Epistar froze 25 percent of its production capacity in March and centralized its high-efficiency manufacturing equipment to raise its overall operational efficiency and lower costs, he said.
Excluding the suspended capacity, Epistar’s utilization rate is running at about 90 percent, he added.
The company will continue to seek high-margin orders to replace low-margin ones to improve its profitability, Lee said.
In an attempt to diversify Epistar’s operations, Lee said the company has started to shift its focus from the competitive blue/white LED segment to high-performance infrared chips for industrial use.
Epistar also plans to expand its business scope to automotive LED applications in European markets, he said.
“With these efforts, we have started to see improving margins and cash flows on a monthly basis from this quarter,” he said.
Lee said that growing demand for LED lighting products during the peak season and steady demand for backlight units for TVs would benefit Episrtar’s business next quarter.
Shareholders yesterday approved a plan to reduce the number of board directors from 11 to nine, with Lite-On Technology Corp (光寶科技) withdrawing from the board and Everlight Electronics Co (億光) losing one of its two board seats.
Lite-On has 5.9 million shares and Everlight has 19.8 million shares of Epistar, the company said.
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