Total revenues of the Liquid Crystals division resumed steady growth after reaching their low point in the first quarter. Despite the 17% decrease to € 733 million in 2009, for the first time in a year they exceeded the € 200 million mark again in the third quarter. This trend continued in the fourth quarter, when total revenues increased by 20% to € 201 million over the year-earlier period. The continuing upward trend is due to the overall recovery of the global liquid crystal display (LCD) business.
|
Liquid Crystals | Key figures |
XLS | ||
|
|
|
|
|
|
in € million |
2009 |
2008 |
Δ in % |
|
Total revenues |
733 |
878 |
–17 |
|
Gross margin |
356 |
542 |
–34 |
|
R&D |
87 |
85 |
3.2 |
|
Operating result |
227 |
391 |
–42 |
|
Exceptional items |
– |
– |
– |
|
Free cash flow |
292 |
402 |
–27 |
|
Underlying free cash flow |
292 |
407 |
–28 |
|
ROS in % |
31.0 |
44.6 |
|
In view of the rapidly increasing population and a growing middle class, market research institutes such as DisplaySearch assume that China will overtake the United States in the coming years as the world’s largest market for televisions. Today, China is already one of the key investment markets for display manufacturers in Korea, Japan and Taiwan.
At € 356 million, the gross margin of the Liquid Crystals division was 34% lower in 2009 than in 2008. Because of increased price pressure as well as underutilization of production capacities and the associated costs, the operating result fell by 42% to € 227 million. Return on sales decreased to 31.0% in 2009 compared to 44.6% in 2008. At € 292 million, underlying free cash flow was 28% lower than in 2008.
Liquid Crystals | Development of total revenues
Market conditions recover
The major display manufacturers recovered well from the crisis of the first quarter. The high degree of underutilization seen at the beginning of 2009 was overcome in the course of the year. The Taiwanese display market presents a particularly positive picture. Manufacturers here are primarily suppliers to the electronics industry and were the first to be affected by the consequences of the economic downturn. However, this market quickly recovered in 2009. The major brand manufacturers in Japan and South Korea, who also manufacture displays themselves and mainly cover the higher-price market segment, also overcame the crisis in the second half of the year. The revival of demand from display manufacturers had a correspondingly positive effect on our quarterly results in the course of the year.
After cutting back liquid crystal production as a result of the global drop in demand, our plant capacity utilization has meanwhile returned to the levels before the economic crisis.