TAIPEI: Innolux Corp, the world’s third-largest LCD panel maker, posted stronger-than-expected net profit of NT$8.65 billion (US$281 million) for last quarter after its gross margin improved to its highest level since its three-way merger in 2010.
Last quarter’s figure spiked from net profit of NT$153 million during the first quarter of last year. That translated into earnings per share of NT$0.87 last quarter, greatly surpassing analysts’ estimates, which ranged from NT$0.5 to NT$0.6.
On a sequential basis, net profit declined 22.4 percent from NT$11.15 billion.
Gross margin surged to 17.7 percent last quarter, from 6.4 percent in the prior year and from 16.1 percent in the previous quarter, bucking the seasonal downtrend, the company’s financial statement showed.
“We have benefited from a robust TV market, a significant decline in material costs and improved yield rates in the first quarter,” Innolux chairman Tuan Hsing-chien said in response to an investor’s question about gross margin improvement.
TV panels accounted for a higher share, 54 percent, of the company’s total revenue of NT$100.16 billion last quarter, compared with 51 percent in the prior quarter.
During the same period, earnings before income tax, depreciation and amortization margin also rose to its highest level in five years at 25.3 percent from 19.9 percent the previous year, surpassing larger South Korean rival LG Display Co’s 22.7 percent and local rival AU Optronics Corp’s 23.4 percent.
Innolux is sticking to its original plan of investing a combined NT$35 billion on a new 6.5G plant to produce high-definition low-temperature polycrystalline silicon panels and a 8.5G production line in Kaohsiung, Tuan said.
The 6.5G plant will be jointly invested by Hon Hai Group and is set to start a pilot run at the end of this year, Tuan said.
Tuan’s remarks were intended to ease investors’ concern about a potential increase in capacity expansion after the company last week said that it plans to raise funds by issuing 950 million new common shares.
Innolux would budget the same figure for next year’s capital spending, he said.
This quarter, shipments of PC and TV LCD panels are expected to be flat from last quarter’s 31.64 million units, Innolux president Wang Jyh-chau said.
The average selling price would remain little changed, he said.
“The supply and demand situation looks healthy for TV panels in the second quarter. Demand for PCs and tablets is weak,” Wang said.
He said a weak euro versus the US dollar prompted price increases for television sets in Europe, reducing demand. However, the weakness is not likely to reduce overall TV sales this year, which are expected to grow as much as 5 percent year-on-year, he said.
This quarter, shipments of small and medium-sized LCD panels are expected to drop by a double-digit percentage from 61.89 million units last quarter, but the average selling price would rise by a double-digit percentage as the company is shipping more large smartphone panels, Wang said.
Overall equipment utilization is expected to be flat from last quarter, he said.
