Tepid demand in key markets during the first quarter may have put a dampener on TPV Technology's ambitious expansion efforts in the global liquid crystal display (LCD) television sector.
Kowloon-based TPV, the world's largest contract manufacturer of personal computer displays, said business in North America and Europe 'was restrained by the sluggish economic climate' and that consumer sentiment had been hit by the earthquake in Japan.
'Consequently, TV panel prices continued to decline and ended the first quarter 5 per cent lower than they were at the beginning [of the year],' chairman and chief executive Jason Hsuan said.
TPV's share price was down 4.73 per cent yesterday to finish at HK$4.23, its lowest close since hitting HK$4.17 on November 27, 2009.
The Hong Kong-listed firm had been gearing up to significantly broaden its TV business this year.
Last month it secured a deal to take over the TV business of Dutch giant Royal Philips Electronics. They agreed to form a joint venture, which is 70 per cent-controlled by TPV, to conduct all research and development, manufacturing, sales and marketing of Philips TVs worldwide.
'The outlook for the world economy is rather hazy at present,' Hsuan said yesterday. This uncertainty 'recently prompted some TV brands to lower their annual LCD TV shipment targets'.
'TPV is therefore quickly adjusting its production plans according to customers' rolling forecasts and order books,' he said.
The company on Thursday still posted a 4.6 per cent increase in first-quarter net profit to US$42.03 million, from US$40.2 million a year earlier, on strong mainland demand for new light-emitting diode-backlit LCD TVs and 3-D TVs. It said sales also climbed in so-called third-tier cities, where consumers replaced their cathode-ray tube televisions.
Revenue grew 12.6 per cent to US$2.69 billion from US$2.39 billion. Sales of computer monitors, which were also lukewarm, accounted for 55.3 per cent of the total turnover last quarter.
Despite the unspectacular start this year, Hsuan said TPV remained confident of its products in the pipeline and the industry's long-term prospects.
Market research firm IHS iSuppli, for example, forecast global 3-D TV sales to rise 463 per cent year on year to 23.4 million units by the end of this year. Annual unit sales would breach the 100-million mark by 2014. It added that US consumers were also buying more large LCD TVs.