E Ink Holdings Inc (元太科技), the world’s largest e-paper display supplier, yesterday reported a 25 percent annual decline in net profit for last quarter as a bumpy transition to better color displays for electronic shelf labels (ESLs) led to a supply chain glut.
Module customers were still grappling with excessive inventory last month, leading to a decline in the company’s Internet of Things (IoT) business, which primarily produces ESL e-paper displays, E Ink said.
Net profit sank to NT$1.32 billion (US$40.9 million) during the three months to March, from NT$1.76 billion over the same period last year. Earnings per share dropped to NT$1.16 from NT$1.54.
Photo: Chen Mei-ying, Taipei Times
Operating profit plunged 54 percent annually to NT$833 million from NT$1.81 billion, but non-operating income grew 95 percent to NT$879 million, including foreign exchange gains of NT$497 million, helping to bolster the firm’s bottom line, E Ink said.
“Looking forward, the IoT business will return to the normal growth path in the third quarter and that growth will extend into the fourth quarter,” E Ink chairman Johnson Lee (李政昊) told investors at a quarterly conference yesterday, adding that the firm’s downstream partner, Walmart Inc, plans to implement its ESL installment project at the end of this year, ahead of schedule.
Regarding e-paper displays for e-readers, growth momentum is robust and better than expected, indicating a smooth switch to color e-readers from black and white, Lee said.
E Ink has noticed that supply of new colored e-paper displays made on Kaleido 3 technology is constrained, he said.
The company retains its positive outlook for this year, expecting revenue to grow every quarter going forward, he said.
“The most important thing is that we have at least ridden through the trough period,” Lee said. “The second quarter is better than the first quarter, and we believe the third quarter will be better than the second.”
E Ink said that it has expanded capacity to produce large e-paper displays for digital signage used in retail stores or for outdoor advertising, and expects to ramp up production by the end of this year.
The firm said it has budgeted NT$5 billion to NT$6 billion of capital expenditure for this year.
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