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LG.Philips posts highest earnings in three years

LG.Philips LCD Co, the world's second-largest maker of liquid-crystal displays, reported its biggest profit in more than three years after a shortage drove up prices of computer screens.

Its third-quarter net income was 524 billion won (US$570 million), compared with a 321 billion won loss a year earlier, Seoul-based LG.Philips said yesterday. That's the biggest profit since the second quarter of 2004. Sales, including revenue from overseas affiliates, rose 43 percent to 3.95 trillion won.

LG.Philips joins Taiwan's AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) in reporting surging sales after they took market share from plasma and glass-tube display makers.

James Kim, an analyst at Lehman Brothers Holdings Inc, estimated that global demand for LCD panels in the third quarter rose about 12 percent from the previous three months.

Earnings at LCD makers may extend gains next year as demand grows faster than supply, according to Credit Suisse Group estimates.

"Prices will continue to be stable until the middle of November, and the outlook for the LCD industry should be positive until next year," said Benjamin Ban, an analyst at Daishin Securities Co in Seoul who has a "buy" rating on LG.Philips. He spoke before the earnings were announced.

For the full year, Kim forecast that sales of LCD televisions would rise 86 percent to 78 million sets, while plasma TVs would increase 22 percent and glass tube TVs would fall 18 percent.

LG.Philips guided that fourth-quarter margin for earnings before interest, taxes, depreciation and amortization would be in the ``mid-thirties'' percent. That compares with a 32 percent margin estimated by the analysts surveyed.

It forecast that average prices in the fourth quarter would fall by a "low-single digit" percentage from the third quarter.
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