AUO Sees Improved Results in Q3 But Uncertainty Ahead

Taiwan display maker AUO reported its third quarter 2023 earnings today, showing signs of recovery amid continued macroeconomic headwinds.

AUO ($NT millions and USD millions)Q3’23Q2’23QoQ %Q3’22
Net Sales70,11063,32110.70%49,732
Cost of Goods Sold-64,768-61,3295.60%-56,996
Gross Profit (Loss)5,3421,992168.20%-7,264
Operating Expenses-6,673-6,4164.00%-6,450
Operating Profit (Loss)-1,332-4,42469.90%-13,715
Net Non-operating Income567160253.90%2,313
Profit (Loss) before Tax-765-4,26482.10%-11,401
Net Profit (Loss)-923-4,73480.50%-10,490
Operating Profit + D&A7,0353,55298.00%-5,884

The company posted consolidated revenues of NT$70.11 billion ($2.1 billion), up 10.7% from last quarter. This was driven by increased panel shipments and prices as brand customers prepared for the year-end holiday season. Total panel area shipments reached around 5.89 million square meters, up 3.3% QoQ and 52% YoY.

Source: AUO

AUO’s financial position appears relatively healthy, with inventory turnover days at 41 and a net debt to equity ratio of 16.7%. The company has been working to streamline operations and cut costs in the face of industry-wide headwinds.

Looking ahead, AUO expects end market demand to weaken further amid macroeconomic uncertainty. The year-end holiday restocking demand has ended, leaving excess panel supply. AUO plans to closely monitor the supply-demand dynamics and adjust operations accordingly.

Source: AUO

Longer term, the company aims to accelerate deployment in vertical business segments such as auto displays, gaming monitors, and niche industrial applications. This vertical integration strategy could help stabilize financial performance despite broader industry volatility. The company cautioned that with intensifying competition and technology disruption, execution of this strategy will be key for AUO to maintain its position as a leading global display provider. The company’s Q3 results provide some optimism, but the industry landscape remains challenging.