LG.Philips LCD Co, the world's second-largest maker of liquid crystal displays, posted its first quarterly loss in two years after an industry glut drove down prices. The company said price declines will slow this quarter.
The first-quarter net loss of 79 billion won (US$78 million), compared with profit of 628 billion won a year earlier, the Seoul-based company said yesterday in a statement. The company posted a greater-than-expected operating loss of 162 billion won and sales dropped 16 percent to 1.8 trillion won.
Expansion by chief executive Koo Bon Joon, 53, and his rivals in the US$35 billion LCD industry has led to an oversupply which prices down 9.5 percent in the first quarter.
LG.Philips was projected to post a first-quarter net loss of 81 billion won, according to the average projection of 15 analysts surveyed by Thomson Financial's IBES. The company posted an operating loss of 162 billion won, greater than the average 97 billion won loss expected by the analysts. Sales dropped 16 percent to 1.8 trillion won, the company said.
The company also said the appreciation of the South Korean won against the US dollar lowered the value of its overseas sales. The won is the best-performing major currency against the dollar over the past year, with a 13 percent gain.
An oversupply of LCDs will ease this year because of rising demand for flat-panel televisions, according to the company.
The market "will begin to stabilize and then show signs of strengthening later in the year, mainly due to the growing demand for LCD TVs," LG.Philips chief financial officer Ron Wirahadiraksa said in a press release.
The company forecasts second-quarter prices to fall by a "single-digit" from the first quarter, when price declines slowed to about 10 percent from 19 percent in the fourth quarter, according to the statement. Average prices fell to US$2,085 per square meter in the first quarter, down from US$3,512 a year earlier, LG.Philips said.
"The oversupply of LCDs will ease this quarter and demand will meet supply in the third quarter," Duke Koo, LG.Philips' executive vice president of sales, said at a news conference in Seoul. "I expect a shortage of screens in the fourth quarter."
Samsung Electronics, based in Suwon, South Korea, predicted in January that the oversupply of screens, which began in the third quarter of last year, would peak during the first quarter.
As the first major LCD maker to report earnings, LG.Philips may help investors gauge the health of the industry. Samsung Electronics Co, the top producer, reports earnings on Friday.
AU Optronics Corp (友達光電), the world's third-largest producer, is due to report April 26 and Chi Mei Optoelectronics Corp (奇美電子) on April 29.
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