E Ink Holdings Inc (元太科技), the world’s biggest e-paper display supplier, yesterday cut its revenue growth forecast for this year again, following a downward revision in August, as its supply chain partners continue to address excess inventories of three-color e-paper displays used in electronic shelf labels (ESL).
The downgraded revenue forecast also reflected slower demand for its new e-paper displays among many of its e-reader and e-note customers, who have postponed plans to use color displays to next year, E Ink said.
The company had expected the technology transition from monochromatic displays to new color displays to take place in the second half of this year.
Photo: Chen Mei-ying, Taipei Times
“The fourth quarter will be weaker than we thought. The first quarter next year will be the lowest point,” E Ink chairman Johnson Lee (李政昊) told an online investors’ conference.
However, there are encouraging signs for the company’s business outlook after some customers reported sales surged 30 to 40 percent on average with the launch of color-display e-readers and e-notes, Lee said.
System integrators installing ESLs are “relatively bullish” about next year’s business prospects, he said.
“We believe the headwinds we are facing now are short-term and the company will be able to sustain growth in the long term,” he said.
Inventories in supply-chain firms would return to healthy levels by the end of the first quarter of next year at the earliest, as customers have taken longer to switch to more advanced four-color display ESLs than the company had expected, Lee said.
From the second quarter of next year, revenue is expected to start picking up every quarter, he said.
Hopefully, the ESL penetration rate would rise to a double-digit percentage from single digits after supply-chain inventories return to healthy levels, he added.
Despite the inventory pressure, E Ink expects its new full-color e-paper displays to enter volume production next quarter.
E Ink reported a 43 percent slump in net profit last quarter to NT$2.4 billion (US$74.75 million), compared with NT$4.24 billion a year earlier.
On a quarterly basis, it was little changed from the previous quarter’s NT$2.42 billion.
Earnings per share dipped to NT$2.1 last quarter from NT$7.08 in the same quarter last year and down slightly from NT$2.12 the previous quarter.
Royalty income from licensing its South Korean subsidiary’s LCD patent fell to about NT$79.74 million last quarter, from NT$223 million a year earlier.
“We have been collecting royalties for more than 10 years. It is gradually approaching the end of its life,” Lee said.
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