E Ink Holdings Inc (元太科技), the world’s biggest e-paper display supplier, yesterday said revenue would continue to grow on an annual basis in the first half of the year, as large-scale retailers such as Walmart Inc are accelerating their adoption of electronic shelf labels (ESLs).
E ink said it is seeing rapidly growing demand for ESLs from hypermarkets in Europe, as retailers are motivated to push for store digitalization due to rising labor costs and a shortage of labor.
“We think higher inflation will boost ESL demand. We are seeing stronger demand and more companies are talking about installing ESLs in stores to cope with workforce reductions. Labor costs go up with inflation,” E Ink chairman Johnson Lee (李政昊) told an online investors’ conference in Taipei.
Photo: Chen Mei-ying, Taipei Times
SES-imagotag, an E Ink customer, earlier this month said that it has partnered with Walmart to digitize store shelves in all of the retailer’s outlets.
The company does not expect high inflation to reduce e-reader sales, Lee said, adding that inflation would likely stimulate sales as reading is a relatively inexpensive leisure activity.
“Demand is stronger than we would have imagined,” Lee said. “Demand is not our concern now. Our challenge is to increase the pace at which we’re expanding capacity.”
Revenue in the first two quarters of this year is expected to be higher than the NT$8.49 billion (US$297.36 million) recorded in the same period last year, E Ink chief financial officer Lloyd Chen (陳樂群) said.
Gross margin is also likely to rise in the January-to-June period, as a shortage of key components, such as chips and LCD displays, improved and they became cheaper, Chen said.
Gross margin stood at 45.58 percent in the first half of last year, company data showed.
To handle robust demand, E Ink said it would double capital expenditure to between NT$5 billion and NT$6 billion this year.
E Ink said it would this year launch four new production lines, which would increase capacity by 1.3 to 1.5 times.
The expansion is constrained by longer-than-expected lead times on equipment, it said.
E Ink said it is also in talks with its module partners to study the feasibility of building module assembly lines outside China, because revenue last month fell 5.42 percent year-on-year as COVID-19 restrictions in China closed its factory and its partners’ factories.
To fund capacity expansion, E Ink said it lowered its cash payout ratio this year to about 71 percent from 85 percent last year.
The company’s board of directors has approved the distribution of a cash dividend of NT$3.2 per common share.
E Ink’s earnings per share jumped about 43 percent to NT$4.53 last year, up from NT$3.18 in 2020.
Net profit for the whole of last year increased to NT$5.15 billion from NT$3.6 billion a year earlier.
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