Corning shares fall as supply chain issues reduce profits
19:40, 26 October 2021
Shares in specialty glass maker Corning fell by around 5% on Tuesday after reporting lower profits from its automotive and smartphone businesses in its latest earnings call.
Corning, which makes screens for smartphones as well as other specialized glass materials, reported a 20% gain in net sales overall to $3.61bn, which was just short of analyst expectations for $3.63bn (£2.64m), according to FactSet surveys.
Net income fell by 17% year over year and 13% quarter over quarter to $371m as automakers and smartphone makers stalled production amid a shortage of semiconductors.
Cornings shares were trading at a price of around $36.6 per share, which is still up more than 5% on the year.
Semiconductor shortages reduced Corning’s automotive sales by $40m, and the company predicted further declines in the fourth quarter until the supply shortage abates.
Still, demand for new cars remains high, and there is optimism that once supply constraints soften sales will return.
Corning also announced a new partnership with Jeep, which is now part of the global automotive company called Stellantis following a merger between Fiat Chrysler and the French car company PSA Group. Corning will make Gorilla glass windshields for 2021 Jeep Wrangler and Gladiator models as a factory-installed option.
The lighter weight windshield technology is expected to improve fuel efficiency in combustion engine cars and improve battery mileage on new EVs.
“Continue to watch this space. We have a number of significant innovations going on to solve glazing problems that EVs...represent,” Corning CEO Wendell Weeks said on Tuesday’s earnings call. “It’s too early to say we have this and start building in another large revenue generator for us, but we ought to be able to say that within the coming 12 months.”
Inflation affects profits
Rising inflationary pressures and higher shipping costs also lowered Corning’s profits in the quarter.
Operating expenses for the nine-month period ending September 30 are up 5.8% to $1.35bn, according to the company’s financial statements.
“Previous quarters we would have said inflation is transitory,” Weeks said. “Through conversations with our supply chain head and our investors, it led us to say this may last longer than we thought and that we may have more challenged supply chains into the future.”
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