E-paper display supplier E Ink Holdings Inc (元太科技) yesterday posted 25.48 percent annual growth in net profit for last year, as demand for higher-margin e-paper for electronic shelf labels (ESL) offset sliding e-reader demand.
Net profit jumped to NT$2.61 billion (US$84.59 million) last year, compared with NT$2.08 billion in 2017. Earnings per share climbed to NT$2.32 from NT$1.85.
The company’s board of directors has approved a proposal to distribute a cash dividend of NT$2.1 per share, representing a payout ratio of 90.52 percent.
With strong ESL growth momentum extending into this year, E Ink said it was confident that revenue would regain growth momentum this year, after posting NT$14.21 billion last year — an annual contraction of 6.58 percent.
The Hsinchu-based company attributed the decline primarily to weaker-than-expected shipments of e-paper displays for e-readers. The e-paper supplier counts Amazon.com Inc as one of its major e-reader clients.
The prospects for e-readers are likely to remain bleak in the first half of this year, E Ink said.
That would lead to “a single-digit drop in revenue in the first half [of this year]. Our major customer in the consumer electronics [CE] segment is relatively conservative about placing orders,” E Ink president Johnson Lee (李政昊) told a teleconference with investors yesterday.
The CE segment is comprised of e-paper displays used mostly in e-readers, the cash cow of the company, E Ink said, adding that the segment contributed more than 70 percent to the company’s total revenue last year.
The company’s Internet of Things (IoT) business — which is comprised of e-paper displays used in ESL, luggage and signage — made up the remainder, it said.
“We still believe this year’s combined CE and IoT revenue will surpass last year. We have a high level of confidence [about achieving the goal],” Lee said.
“This year ... about 70 percent to 80 percent of our ESL capacity is booked by clients,” Lee said.
To cope with increasing demand, E Ink plans to convert its US factory to produce ESL e-paper displays, Lee said.
The US fab, which is currently running at low utilization, produces e-paper displays used in e-readers, he said.
On the downside, E Ink said that royalty income would decline this year from last year’s NT$2.36 billion, extending a downtrend.
Last year’s decline was partly due to reduced shipments from financially troubled Chunghwa Picture Tubes Ltd (CPT, 中華映管), E Ink said, adding that the impact might be bigger this year.
CPT is one of the major LCD panel makers that licenses E Ink’s high-resolution fringe-field switching LCD technology to make high-definition displays. CPT briefly suspended production in December last year due to cash problems.
Use of fringe-field switching technology is waning as OLED technology slowly replaces LCD technology, E Ink said.
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