LCD panelmaker AU Optronics Corp (AUO, 友達光電) yesterday reported that its first-quarter net profit dropped more than half on weaker-than-expected TV demand from China due to excess inventory.
Despite an unfavorable pricing environment, AUO still posted an operating profit of NT$2.95 billion (US$99.3 million) in the first three months of the year, outperforming bigger South Korean rival LG Display Co, which unexpectedly posted a net loss of 49 billion won (US$44.5 million).
“Demand cooled off in the first quarter, which was, as usual, a slow season,” AUO chairman and chief executive officer Paul Peng (彭双浪) told investors. “However, AUO performed relatively well as its efforts to boost its products’ value bore fruit. The quarterly [operating] profit matched our expectations.”
The company delivered a better earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 16 percent last quarter, compared with LG Display’s 14 percent.
Television sales at the end of last year and during the Lunar New Year fell short of television vendors’ expectations in China, which resulted in a bigger-than-expected inventory pileup, Peng said.
AUO expects its clients to complete their inventory digestion this quarter and for TV panel demand to pick up next quarter, Peng said.
“We are confident about orders in the second quarter. Customer demand is warming up,” Peng said, adding that the currency exchange rate and US-China trade dispute pose downside risks for the company.
AUO’s gross margin shed 1.5 percentage points to 10.9 percent last quarter due to the 2.6 percent rise in the New Taiwan dollar against the greenback, he said.
Shipments of large-sized panels, mainly for TVs, are expected to drop by a low single-digit percentage point this quarter from last quarter’s 28.6 million units, the company said.
AUO expects factory utilization to remain high at 95 percent.
Average selling prices are to remain flat in US dollar terms, the company said.
AUO reiterated its forecast that global flat-panel supply and demand would largely be balanced this year.
Global panel demand is forecast to grow at an annual rate of between 6 and 8 percent this year, while supply growth would be contingent on how fast Chinese makers improve their yields, it said.
During the quarter ending March, net profit plunged 54 percent to NT$4.31 billion, compared with NT$9.44 billion in the same period last year.
On a quarterly basis, net profit edged up 2.7 percent from NT$4.2 billion, aided by an asset disposal gain of NT$1.19 billion and unspecified tax credits.
Operating profit fell about 75 percent year-on-year from NT$12.02 billion and down 48 percent quarter-on-quarter from NT$5.7 billion.
The average selling price shrank 13.78 percent annually or 2.68 percent quarterly to US$363 per square meter, the company’s financial statement showed.
AUO plans to spend NT$45 billion on new facilities and equipment this year.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
RSS