AUO (AU Optronics) announced its financial results for Q3 2024, reporting consolidated revenue of NT$77.75 billion, marking a year-on-year growth of 10.9% and a quarter-on-quarter increase of 4.6%. This is the highest quarterly revenue this year. However, the company recorded a net loss of NT$930 million (a loss of NT$0.12 per share), with a gross margin of 10.9%.
Revenue Growth Driven by Panel and Automotive Contributions
The revenue growth in Q3 was primarily driven by the panel and automotive sectors. However, the vertical solutions business saw some setbacks due to the completion of solar energy projects and lower-than-expected shipments of solar modules, which offset the gains from the panel and automotive segments. Despite an increase in operating expenses compared to the previous quarter, AUO continued to report a loss, marking its tenth consecutive quarter of losses. The management team believes there is room for improvement.
Financial Health and Stable Inventory Management
Despite the losses, AUO emphasized its stable overall financial structure, noting that its inventory days were at 44 days, and its net debt ratio stood at 33.4%, maintaining a relatively healthy inventory level.
The revenue distribution from AUO‘s three major operational pillars in Q3 was as follows: 55% from Display Technologies, 26% from Mobility Solutions, and 13% from Vertical Solutions.
Capital Expenditure and Investment Strategies
In Q3, AUO‘s capital expenditure totaled NT$5.6 billion, and the forecasted capital expenditure for the full year of 2024 has been reduced to NT$31 billion, NT$2 billion lower than the previous estimate. Capital expenditures for 2025 will still require approval from the board, but the company is shifting its focus toward lighter asset manufacturing models in the Mobility and Vertical Solutions sectors. As a result, AUO expects capital expenditure to decrease in the medium to long term.
Positive Trends in Display and Mobility Solutions
Looking back at Q3, AUO saw strong orders from brand customers preparing for the year-end sales season, leading to a stronger-than-expected pull-in of demand. This boosted revenue in the Display sector by 9% quarter-over-quarter and led to steady growth of 4.1% in Mobility Solutions. Together, these two segments contributed to a 4.6% increase in overall revenue compared to the previous quarter.
Advancements in Micro LED Technology
In the Micro LED segment, AUO has already begun mass production and shipping of Micro LED panels for both wearable devices and large-size displays. Recently, the company announced that its Micro LED production line has expanded from the 1st generation to the 4.5th generation to increase production capacity.
Strategic Partnerships in the Photonics Industry
AUO has also joined the Silicon Photonics Industry Alliance, recognizing opportunities in the AI sector, particularly in servers and high-speed computing. The company sees the potential to leverage optical communication to address issues in these areas. As part of this initiative, AUO will collaborate with its alliance partners to explore new market opportunities and jointly drive industry standards and product development.
Outlook for Q4 2024 and 2025
Looking ahead to Q4 2024, the peak-season inventory demand is expected to taper off, as some customers advanced their orders to Q3. The Display sector is expected to enter the traditional off-season, but the Domestic China policy of old-for-new replacements will help mitigate the downturn. As for the Mobility Solutions and Vertical Solutions sectors, despite the impact of overall economic uncertainties and seasonal factors, the demand remains relatively stable, which is expected to ease the seasonal downturn in the Display sector.
For 2025, the supply and demand in the Display sector are expected to become healthier. AUO‘s Mobility Solutions and Vertical Solutions businesses are seeing a good order outlook, with continuous growth expected in the coming year, contributing to improved overall business performance.
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