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LG Display’s Q3 profit jumps 89%

A visitor looks at photographs of TV sets made with LG Display flat screens at an exhibition in Goyang, South Korea, yesterday. Flat-screen maker LG Display said yesterday that a seasonal slowdown from late this year would be more moderate than other years due to tight inventories and the likelihood of industry output cuts. PHOTO: REUTERS

LG Display Co, the world’s second-largest maker of liquid-crystal displays, reported a third-quarter profit that missed analyst estimates and forecast panel prices will fall.

Net income increased 89.5 percent from a year earlier to 559 billion won (US$483 million), Seoul-based LG Display said yesterday. That missed the 847 billion won median estimate of 10 analysts surveyed by Bloomberg News.

The company set aside US$170 million in provisions related to price-fixing litigation in the quarter, chief financial officer James Jeong said at a briefing.

The LCD panel-making industry may face a “slight” oversupply, chief executive officer Kwon Young-soo said this week, signaling that the shortage which drove up prices last quarter has ended.

LG Display, Samsung Electronics Co and Japan’s Sharp Corp either plan or are considering building factories in China.

“Going into the fourth quarter, and into next year, earnings are set to decline,” said Kim Young-tae, a fund manager at KTB Asset Management Co in Seoul, which looks after US$8.7 billion in assets.

“We’re already witnessing lower prices, but I don’t think it’s going to be as bad as the previous industry slowdown,” Kim said.

Sales, including those of overseas affiliates, increased 55 percent to 5.97 trillion won, LG Display said, in line with the 5.96 trillion won median estimate in the analyst survey. Operating profit, or sales minus the cost of goods sold and administrative expenses, more than tripled to 904 billion won. Analysts estimated 959 billion won.

While shipments will probably increase by a “high single digit” percentage in the current quarter, average panel prices are expected to “decline gradually,” LG Display said.

Prices of most panels used in computer monitors, notebooks and televisions fell between 1 percent and 5 percent in the first half of this month compared with the second half of last month, Taipei-based researcher WitsView Technology Corp said last week.

“We expect a very mild panel price fall for the rest of this year due to healthy inventory and panel makers’ strong intention to control their utilization ratios,” James Kim, a Hong Kong-based analyst at Nomura Holdings Inc, wrote in a report last week.

LG Display, which in August signed a preliminary agreement with the city of Guangzhou to build a factory based on so-called eighth-generation LCD technology, said on Wednesday it plans to form a US$4 billion venture to make the panels.

The size of the investment and its timing are undecided, LG Display said.
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