Why? While the Covid-19 outbreak and associated lockdowns resulted in an uncertain outlook for the broader markets, the multi-billion-dollar Fed stimulus announced in late March 2020 helped the markets stage a strong recovery. There was a quicker economic rebound, with economies opening up gradually, given the rise in the global vaccination rate.
Looking at the bottom line, the company's adjusted EPS stood at $0.57, compared to $0.53 in the prior-year quarter. This can be attributed to the mix of higher revenues and margin expansion. The Q2 earnings were slightly better than the $0.56 consensus estimate.
Below are key drivers of Corning's divisions that present opportunities for upside or downside to the current Trefis price estimate for Corning:
The company’s 3 smaller segments as mentioned above have all been growing faster than the underlying industries on account of a myriad of reasons like – Environmental Technologies' growth was driven by the adoption of Corning’s proprietary gasoline particulate filter (GPF) innovation. Specialty Materials growth was led by the adoption of industry-leading cover glass innovations despite smartphone unit sales being down 3% Life Sciences reached a $1 billion sales milestone in 2019, growing at nearly twice the rate of a strengthening market on account of newer applications, especially in growth categories like cell culture and gene therapy.
Corning is a global technology company that manufactures and processes a variety of products at approximately 119 plants in 15 countries. It makes money primarily through its joint ventures Samsung Corning and Dow Corning. Samsung Corning manufactures glass substrates for active-matrix liquid crystal displays (LCDs) which are primarily used in notebook computers, flat-panel desktop monitors, and LCD televisions. Dow Corning manufactures silicone products. Corning's other business segments include environmental technologies, life sciences, and telecommunications.
The display technologies business is the largest contributor to Corning's value.
Corning's Display Technologies segment accounts for nearly 32% of the company's value. Its proprietary fusion-based process produces high-quality glass substrates which are highly uniform, clean, light-weight, and thin, which are important qualities required for manufacturing LCD screens. The process enables Corning to produce large-sized substrates in a cost-effective manner.
Corning continually invests in R&D to develop innovative products to cater to the demands of LCD panel manufacturers. Corning recently launched Iris glass, which could help replace light guide plates in LCD TVs and make them slimmer and lighter. It also launched a new project named Gorilla Glass SR+, its latest version of Gorilla Glass, which is more scratch-resistant than a sapphire-based cover glass and stronger than Gorilla Glass 5.
Glass manufacturing is a commoditized business where prices are determined solely by factors of supply and demand. Innovations in LCD technology and manufacturing overcapacity are putting downward pressure on LCD prices. However, the price decline in 2019 stemmed in mid-single-digit and the company expects the pricing environment to improve in the near term. As a result, strong demand from emerging markets coupled with growth in TV screen size and ramp-up of the Gen 10.5 plant should aid this recovery.
Notebook, tablet PC, and LCD television penetration remain low in most emerging markets and developing nations. We expect this demand to increase and drive the growth in global LCD shipments.
Consumers prefer larger displays on their TVs, notebooks, tablets and mobile phones because of the enhanced viewing pleasure. This may drive an increase in demand for LCD glass and thereby increase shipments. The demand for large screen LCD TVs is also likely to be driven by new technologies such as Ultra HD, 4K, and 8K, which provide enhanced viewing pleasure on large screen sizes.
The replacement rate for tablets, notebook PCs, and LCD televisions remains high in developed markets. This is expected to create demand for LCD panels and hence increase the total number of shipments.
Corning believes it has sustained its competitive advantages in LCD glass substrate products by investing in new technologies. This is likely to continue and could keep costs high.
To ensure compliance with emission standards, automobile manufacturers resort to the use of emission control systems. As these standards get even stricter, automobile manufacturers have to upgrade to newer and effective emission control systems in order to remain compliant. This has a positive impact on the automotive exhaust systems market, which includes manufacturers of automotive substrates and filters.