Corning has posted sales of US$1.9 billion for the first quarter of 2011, increasing 9% on quarter and 24% on year, with net profit before tax rising 15% sequentially to US$867 million. Earnings per share (EPS) came to US$0.47.
Remarking on the strong first-quarter results, Wendell P Weeks, chairman, CEO and president of Corning, said, "We built on the momentum coming out of 2010 to deliver exceptional year-over-year performance from all of our business segments. Our volume across the display business remained strong. We continued to experience very healthy sales and exceptional market acceptance for Gorilla glass. Our telecommunications performance was robust and at levels we haven't experienced in a number of years, and the recovery in the heavy-duty diesel market has driven our diesel sales to record highs."
Sales in the Display Technologies segment were US$790 million, increasing 5% sequentially and comparable to a year ago, Corning said. Glass price declines in the quarter were more moderate than the previous quarter, as expected.
Telecommunications segment sales reached US$474 million, a 7% sequential increase and 30% year-over-year improvement. Environmental Technologies segment sales came to US$259 million, an increase of 12% sequentially and 35% year over year.
Specialty Materials segment sales were US$254 million, a 29% sequential increase and 165% on-year growth, which was fueled by a 50% increase in Gorilla glass sequential sales as more handheld and IT consumer device manufacturers make it the cover glass of choice, Corning said, adding these Gorilla glass sales include TV cover glass.
Corning's first-quarter equity earnings totaled US$398 million compared to US$511 million in the previous quarter and US$469 million a year ago.
Gross margin for the first quarter remained strong at 45%, an increase versus fourth-quarter gross margin of 43%. Net profit before tax, excluding special items, was US$867 million, an increase of 15% sequentially, and the result of strong sales growth, higher gross margin, and lower operating expenses. Excluding special items, net profit after tax was up only slightly sequentially, the result of the anticipated increase in the company's effective tax rate, Corning said.
James B Flaws, vice chairman and CFO of Corning, said, "First-quarter performance was tremendous and it bolsters our confidence that each of our business segments will experience substantial growth this year and for several years to come."
In the display segment, Corning expects combined glass volume in the second quarter to be consistent with the first quarter. Glass volume for the company's wholly owned business is anticipated to decline in the low- to mid-teen range sequentially, primarily the result of lower utilization rates at several customers. At Samsung Corning Precision, volume is expected to increase in the low- to mid-teen range for the quarter. Glass price declines are expected to continue to moderate.
Regarding the earthquake and tsunami in Japan and Sharp's recent utilization reductions, Flaws said, "We have reviewed the display component supply chain in Japan. It is our opinion that a potential component shortage that could cause a significant disruption is unlikely. With regard to Sharp's decision to reduce production, we see this as a temporary situation that will not last beyond the second quarter."
As a result, Corning said it expects a significant increase in LCD glass demand in the third quarter with Sharp resuming production and the global supply chain preparing for the seasonally strong fourth quarter.
Specialty Materials sequential sales in the second quarter are expected to grow about 20%, thanks to continued strong Gorilla glass performance.
Corning anticipates that equity earnings will be up about 10% sequentially. "There are several key market trends that seem to be playing to Corning's strengths as we look to the future. These trends provide us with great opportunities across all our major businesses and position Corning to grow sales to more than US$10 billion by 2014," Flaws concluded.