Wed, Jul 12, 2006 - Page 11 News List

LG.Philips LCD posts large Q2 loss

AP AND BLOOMBERG , SEOUL

LG.Philips LCD Co, one of the world's top makers of liquid-crystal displays, reported yesterday that it swung to a loss in the second quarter as high inventories drove average selling prices sharply lower.

The Seoul-based company said it lost 322 billion won (US$340 million) in the three months ending June 30, compared with a profit of 41 billion won in the same period last year. Sales rose 0.3 percent to 2.32 trillion won.

The result was slightly worse than analysts' expectations.

"The results were really bad and the outlook suggests they may be really bad again," said Chun Seong-hoon, who helps manage the equivalent of US$1.6 billion at SH Asset Management Co in Seoul. "They're suggesting the recovery will be later than expected."

LG.Philips chief financial officer Ron Wirahadiraksa said the company will slash its spending target for this year by 30 percent and suggested the company will post another loss this quarter as screen prices fall.

The company plans to invest about 3 trillion won this year, cutting its earlier budget of 4.2 trillion won, Wirahadiraksa said in a company statement.

The LCD maker began reducing production at its newest P6, P7 factories starting last month, Jeong Cheol-dong, vice president of manufacturing technology, said in a presentation yesterday.

"We are disappointed with our financial performance in the second quarter," Wirahadiraksa said in the statement. "We are addressing an increase in inventory levels," which bloated to a record during the quarter.

The company forecast third-quarter shipments to grow by more than 25 percent from the second quarter, the statement said.

Prices at the end of September will probably fall about 5 percent from the end of last month, it said.

As the first major LCD producer to report earnings, LG.Philips helps investors assess the extent to which the industry overestimated sales from the World Cup.

Samsung Electronics Co, the world's largest LCD maker, reports on Friday. AU Optronics Corp (友達光電), the third-largest producer, reports on July 25 and No. 4 Chi Mei Optoelectronics Corp (奇美電子) announces its earnings next month.

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