Thu, Feb 09, 2012 page12

• AUO suffers record loss on global slump

  BARGAIN BASEMENT: Having to set aside reserves to pay for potential damages from price-fixing lawsuits in the US contributed to the firm’s fifth consecutive quarterly loss

  • By Lisa Wang / Staff Reporter
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  AU Optronics Corp (AUO, 友達光電), the nation’s No. 2 LCD panel maker, yesterday posted record-high quarterly losses for the last quarter as the global economic slump cut demand for LCD TVs and drove down prices.

  An additional allocation of reserves of NT$3.1 billion (US$105 million) for potential damage stemming from price-fixing lawsuits in the US added to the already weak quarterly results.

  Net losses widened to NT$21 billion in the fourth quarter of last year, compared with losses of NT$11.34 billion in the fourth quarter a year earlier and losses of NT$15.8 billion in the previous quarter, AUO’s financial statement showed. That marked the company’s fifth consecutive quarterly loss.

  The results were worse than the industry had been anticipating, and AUO blamed slower-than-expected sales of its new products.

  “The results disappointed most analysts, even after the antitrust spending had been taken out of consideration,” said Stanley Lin (林其範), an analyst with Oriental Securities Investment Advisory Co (亞東證券投資顧問).

  Lin had previously estimated that AUO’s losses would narrow to NT$15.52 billion in the fourth quarter and he said that the company’s prospects for the near term look bleak.

  “I did not hear much in the way of exciting messages from the company,” Lin said. “I do not expect them to return to the the black any time soon based on the current market situation.”

  Giving his outlook for the whole of this year, AUO president Paul Peng (彭雙浪) told investors that “the worst conditions for the industry are over.”

  Peng based his forecast on the expectation of a reduction in the supply glut this year and he added that global LCD panel capacity would expand 14 percent year-on-year this year, slightly in excess of the 8 percent annual growth rate in demand.

  That would help the company’s revenues and profitability, which “will improve quarter by quarter this year,” Peng said.

  AUO pinned its hopes mostly on growth in demand for LCD TVs in emerging markets in populous nations, such as India, Indonesia and Brazil.

  In the quarter ending Dec. 31, revenues dropped 9.5 percent compared to the third quarter, or down 13 percent year-on-year to NT$89.51 billion, with 42 percent of revenue coming from TV panels.

  This quarter, shipments of LCD panels for TVs and PCs are expected to be flat, in a best case scenario, from the shipments of 26.8 million units in the last quarter, as demand looks to rebound gradually amid low inventory, AUO said. Such conditions would cause the equipment utilization rate to rise slightly to between 75 percent and 80 percent, the panel supplier said.

  The average selling price of TV and PC panels is expected to hold steady this quarter, after dropping almost 6 percent quarter-on-quarter to US$672 per square meter, as AUO was scheduled to ship new high-resolution and thinner products that deliver a premium, from this quarter.

  In a separate statement, AUO said last month’s revenues plunged 21.7 percent month-on-month to NT$21.71 billion and shipments of TV and PC panels slid 15 percent monthly, as the company was in a product transition period, extending from the last quarter.

  AUO said it was scheduled to massively produce high-resolution OLED panels used in smartphones this quarter and it planned to unveil OLED samples for TVs by the end of this year.

  AUO also kept unchanged its budget of NT$40 billion on new equipment and facilities, down nearly 30 percent from last year’s NT$57 billion.

  AUO also said the company’s financial status was healthy and it has sufficient cash to pay back NT$48 billion in syndicated loans that would due this year. The company accumulated about NT$90 billion in cash and in equivalence plus available syndicated bank loans of NT$40 billion.

  For the full year of last year, AUO booked NT$61.45 billion in losses, reversing net profits of NT$7.41 billion in 2010.
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