Display panel maker AU Optronics Co (AUO, 友達光電) yesterday said that first-quarter net profit hit a 13-year high of NT$11.83 billion (US$423.26 million), as the COVID-19 pandemic-induced stay-at-home economy stimulated demand for panels for TVs and computers.
AUO expects the growth momentum to carry through the rest of the year and be sustainable in the longer term as work from home, remote schooling and home entertainment become the new norm.
A continued component supply crunch has added to the supply-demand imbalance in the panel industry, the company said.
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“We are seeing very strong demand during the second quarter. We have clear order visibility until the end of this year. Some customers have approached us to discuss supply for next year,” AUO chairman Paul Peng (彭双浪) told an investors’ teleconference.
AUO usually starts new supply contract negotiations in October or November, Peng said.
“Overall, supply continues to be tight. Our factories have been running at full capacity since the middle of last year. We still cannot fully satisfy customers’ demand,” he said.
Addressing investors’ concern about overbooking risks, Peng said that “it is still manageable,” as customers are facing a significant supply gap of between 10 and 30 percent.
With shortages in the supply chain likely to persist, AUO expects its average selling prices to rise sequentially by a low-teen percentage this quarter, following a quarterly hike of 12.7 percent, or 43 percent annually, to US$424 per square meter last quarter.
Shipments this quarter should inch up by a low-single-digit percentage sequentially, capped by tight supplies of chips, glass substrates and other key components.
Certain production lines would also be temporarily halted for annual maintenance, leading to a slide in output, it said.
The COVID-19 pandemic has spurred demand for larger and higher-spec panels for TVs, monitors and notebooks as people tend to spend a longer time in front of their screens, AUO said.
AUO also has a more optimistic view of long-term prospects, with the display industry getting out of a boom-and-bust cycle, as Chinese manufacturers curb expansion without government support.
“Competition in the industry is no longer distorted, but has returned to normal market mechanisms,” Peng said.
Under such a benign competitive landscape, AUO should make stable profits in the next few years, Peng said.
During the quarter ending March 31, net profit surged to NT$11.83 billion, reversing losses of NT$4.99 billion in the same period last year.
On a quarterly basis, net profit soared about 40 percent from NT$8.44 billion in the final quarter of last year.
Gross margin improved to 22 percent last quarter, from 16.9 percent the previous quarter and minus-0.7 percent a year earlier.
AUO plans to budget NT$22 billion for capital expenditure this year, up 41 percent from NT$15.6 billion last year.
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