E Ink Holdings Inc (元太科技), which supplies e-paper displays for Amazon.com Inc’s Kindle series, yesterday reported that profit grew last year on higher royalty income and better gross margin.
Net income surged to NT$539 million (US$16.7 million), or NT$0.47 per share, last year from NT$13.48 million, or NT$0.01 a share, in 2014. Gross margin climbed to a record-high of 31 percent from 22 percent over the same period.
The profit figure fell short of Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$822 million in net profit for last year.
E Ink financial executive Lloyd Chen (陳樂群) attributed the upswing in gross margin to a combination of factors: better product portfolio, higher yield rates, lower raw material costs and an improvement in labor and manufacturing costs.
The company, with 70 percent of its revenue coming from e-paper displays, faced slow demand in the first quarter of the year as consumers tightened spending amid weak macroeconomic conditions, Chen said.
Combined revenue in January and February contracted 15.17 percent to NT$1.46 billion, E Ink Holdings data showed.
As E Ink has been struggling in its core business over the past four years, given lukewarm growth in e-readers and lackluster demand for LCD panels, the company has been counting on contributions from royalty fees to make a profit.
Last year, E Ink booked royalty payments of NT$3 billion from licensing an LCD manufacturing technology owned by its South Korean subsidiary Hydis Technologies Co to partners, including LCD panel manufacturers. The technology is widely used in handsets, including Apple Inc’s iPhones.
As a result, E Ink saw its operating losses fall to NT$449 million last year from NT$1.39 billion in 2014.
E Ink’s profitability last year was dragged by extra spending after Hydis shut down all its LCD factories. E Ink booked NT$1.86 billion in expenses from the South Korean LCD manufacturing subsidiary last year.
The expenses from Hydis will drop drastically this year as a big chunk of last year’s expenses were one-off payments for preferential employee retirement programs and severance payments, Chen said.
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