Ceramic Industry News

Corning Updates Third Quarter Outlook (posted 9/14/09)

Wendell P. Weeks, Corning Inc.’s chairman and CEO, recently provided an update on the company’s recovery from the recent earthquake in Japan while speaking to investors at the Citi Global Technology Conference in New York, N.Y.

Addressing the earthquake’s impact on Corning’s facility in Japan, Weeks noted that “the restart of our Shizuoka plant is on track” and added that the facility is restarting capacity this month, with more planned in October. He also said that the company undertook additional efforts to ease some of the impact from the disruption by restarting production units in Taiwan that it originally planned to have available later this year. The company noted it has been allocating capacity to its customers, but customer demand still exceeds its ability to supply. The company expects that the rebuild at Shizuoka will result in approximately $22 million in incremental accelerated depreciation charges in the third quarter.

The company now anticipates sequential volume at its wholly owned business to be down less than 5% sequentially in the third quarter, vs. its previous estimate of a 5-10% decrease. At Samsung Corning Precision Glass Co., Ltd. (SCP), the company’s equity company, third quarter volume guidance remains unchanged at flat to up slightly sequentially. The company estimates the sales impact from the disruption will be about $25 million in the third quarter. The impact of the disruption has been partially mitigated by restarted production in Taiwan. The net impact to corporate gross margin will be approximately 2% in the third quarter, primarily related to the incremental accelerated depreciation.

The display supply chain “is expanding in preparation for what we now believe will be a stronger fourth quarter than we previously thought,” said Weeks. “As a result, we now anticipate worldwide glass demand in the fourth quarter will be as strong as the third quarter.” The company has not finalized its fourth quarter outlook, but at this time believes volume at both its wholly owned business and SCP will be flat to up slightly vs. the third quarter. The company also expects fourth quarter glass pricing to be flat sequentially.

On the retail front, Weeks reported that “LCD TV demand continues to be robust.” Preliminary retail data provided by NPD, an independent consumer market research firm, suggests that U.S. LCD TV unit sales in August increased 14% over last year. “We were encouraged by the week-to-week trend, which showed significant year-over-year growth in the third week of August,” said Weeks. “We believe this step-up in demand was the result of strong back-to-school sales.” Similarly, August unit sales increased in Japan by 57%, as indicated by independent research firm BCN.

Corning's comments to investors at the Citi Global Technology Conference are available by accessing the IR events calendar on Corning’s website. To access the calendar, visit www.corning.com/investor_relations and click Investor Events on the left.


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