(Translator: Janet Chen, Editor, TrendForce)

Top LED manufacturer AOT posted stable revenues for second quarter, but bad product portfolio and pressure to lower prices, lead to sliding gross margins and net losses.

Panel industry's peak season demand will spur backlight demand in third quarter of 2016, so AOT's shipment scale and revenue are projected to achieve double digit growth quarterly. Nonetheless, profit and loss will depend on the rebounding scale of gross margin.

AOT is a LED packaging giant affiliated with the Foxconn Group. Its top two stockholders are Foxconn Group and Nichia. AOT's major customers are Innolux, Japanese, Korean, and Chinese manufacturers. About 90% of its LED products are for backlight market applications, and new segments such as lighting and automobile occupied about 10% of its total products.

Backed by major shareholders, AOT maintained profitability even though the LED industry had severe market corrections and prices continued to drop during the past few years. Nevertheless, because of AOT's product portfolio and pressure to lower prices in second quarter of 2016, it sustained a stable revenue but its gross margin plunged, and AOT posted operating loss and net losses.

The panel industry's traditional peak season demand in third quarter will stimulate backlight product demands in the upcoming quarter, projected financial institutes. AOT's revenue in third quarter of 2016 is estimated to rebound to double digits from last quarter, and even slightly higher than a year ago. Backed by rising utilization rate, AOT's gross margin might be improved. However, the extent of improvements requires further observations.

AOT's revenue in second quarter of 2016 came to NT $1.31 billion, up 1.5% quarter over quarter and down 6% year over year. Nonetheless, its single quarter gross margin declined to 9.04%, down 5.7% over the quarter and down 4.3% year over year.

AOT saw an operating loss and its revenue loss amounted to NT $27 million. Net loss was NT $33 million.

The accumulated revenue in first half of 2016 fell nearly 17% year over year to about NT $2.60 billion.

The gross margin arrived at 11.86% in first half of 2016 and was down 4% year over year, while operating profits plummeted 93% year over year to NT $12 million.

Its net losses reached NT $3 million.

Following June's rebounding revenue, July's revenues further hiked up 8.8% monthly to NT $513 million, and increased 11.9% year over year.

The first seven months' revenues accumulated downed 13.29% year over year to about NT $3.117 billion, and its third quarter's revenue is projected to surpass second quarter.