BOE Technology Lost CNY808mn in 08

BOE Technology Group Co., Ltd. (SZSE: 000725) released its financial report for 2008 on April 20, 2009, posting a net loss of CNY 808 million.

Operating revenue slipped 25.39% year on year to about CNY 8.334 billion. The Beijing-headquartered thin-film transistor-liquid liquid crystal display (TFT-LCD) maker earlier said it would possibly end the entire 2008 with a net loss of CNY 700 million to CNY 1 billion.

The bleak performance, according to BOE Technology, was mainly caused by the shrinking demand for LCD panel and plunging LCD panel price amid the lingering financial crisis.

There had been a steep decrease in global LCD panel price since June 2008, posting a great threat to fast-expanding LCD makers around the world. BOE Technology saw a 29.37% year-on-year decline in revenue from major business in 2008.

Notably, BOE Technology's slumped revenue from major business is somewhat echoed by its rivals. Chi Mei Optoelectronics Corporation (CMO), a top-ranking TFT-LCD panel maker based in Taiwan, said previously that its LCD panel shipment had plumped 40% since October 2008, when demand from booming North America and Europe slowed down.

BOE Technology did take some steps, including revising its operation strategy, in an attempt to pare down costs. However, the company failed to come out of the red even after launching the measures.

In spite of the loss, BOE Technology set up new production bases in Chengdu, Anhui, and Beijing as planned, in a move to expand its deployment across the country.

The TFT-LCD maker's CNY 17.5 billion sixth-generation (6G) LCD production line in Hefei, Anhui Province, broke earth days earlier. It is installing equipment for its CNY 3.1 billion 4.5G LCD production line in Chengdu, Sichuan Province, disclosed people in the know.

BOE Technology gained green light from the China Securities Regulatory Commission (CSRC) to sell new shares to fund its 6G LCD production line project on April 1, 2009, two weeks before it kicked off the well-brewed project.

Impressively, the company is scheduled to start building a LCD technology lab in Beijing on April 21, 2009, part of its efforts to strengthen R&D.

The global LCD industry slipped directly into a downturn after LCD panel price posted a 60% drop since September 2008, when the financial crisis took its toll on the global economy. SVA (Group) Co., Ltd., one of the archrivals of BOE Technology, is struggling against insolvency.

(USD 1 = CNY 6.83)