Corning’s Q3 sales edge up amid market uncertainties

27 Oct 2022

Glassmaker’s display sales fall sharply – but are offset by better optical fiber and solar business.

Corning’s core sales were up slightly year over year, reaching $3.7 billion.

Wendell P. Weeks, Corning’s Chairman and CEO, commented, “In the third quarter, our core sales were up slightly year over year, reaching $3.7 billion, with core earnings per share [EPS] of $0.51 – all while display panel maker utilization reached its lowest level since 2008.

He also noted certain other market weaknesses: “Smartphone, tablet, and notebook retail unit sales declined significantly and automotive production remained constrained.”

He added, “We offset the effects of these factors by delivering 16% year-over-year growth in optical communications and by capturing ongoing demand in the solar market that contributed to 33% year-over-year growth in Hemlock and Emerging Growth Businesses.”

“While three of our key demand drivers are down, our cohesive and focused portfolio is providing strategic resilience in the current environment. We remain well positioned to deliver profitable multiyear growth. We’ll continue to execute with discipline, invest where we see strength, and pace to demand,” Weeks said.

Highlights

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  Wendell P. Weeks.

  GAAP sales were $3.5 billion. Core sales were $3.7 billion, up slightly from a strong third-quarter 2021.
• Optical Communications, Environmental Technologies, Life Sciences, and Hemlock and Emerging Growth Businesses delivered year-over-year growth; sales in specialty materials increased sequentially and declined year over year.
• Display Technologies’ sales declined 22% sequentially and 28% year over year, as volume declined in line with the market; glass price was consistent sequentially.
• Core gross margin and core operating margin of 36.1% and 16.9%, respectively, were impacted by low volume in Display Technologies.
• For the fourth quarter, Corning expects $3.45 billion to $3.65 billion in core sales with core EPS of $0.41 to $0.47.

Analysis and forecast

Ed Schlesinger, Corning’s executive vice president and chief financial officer, provided some analysis of the figures and market conditions: “As we told investors in early September, panel makers reduced their production levels below our already low expectations.

“Our lower glass volume resulted in a 28% year-over-year decline in Display Technologies’ sales and caused a drag on the company’s overall profitability. Our participation in important secular trends and general outperformance across our markets helped offset this impact,” Schlesinger said.

“Looking ahead to the fourth quarter, we expect $3.45 billion to $3.65 billion in core sales with core EPS of $0.41 to $0.47. Although we believe that panel maker utilization reached the bottom in September, we would like to see more evidence before we guide a significant recovery in glass demand,” he added.

“When glass demand does increase, we expect our volume to return and company profitability to improve. We also expect optical communications’ sales to be down sequentially due to customer project timing. We expect to continue outperforming our markets and will maintain strong financial stewardship,” Schlesinger concluded.