LG Display posts second straight quarterly loss

SEOUL, S. KOREA: South Korea's LG Display, the world's No.2 LCD flat screen maker, reported its second consecutive quarterly loss, hit by tumbling panel prices on fragile demand from television and computer makers.

Panel makers are reducing production, led by Sharp Corp after the powerful earthquake last month, but demand from television and computer makers remains too weak to absorb even reduced supplies - putting pressure on both panel prices and volume shipments.

Analysts however expect a booming market for smartphones and tablets to help LG Display, a key panel supplier for Apple's iPhone and iPad, return to a small profit this quarter, although a faster recovery will be delayed until demand from TV makers picks up, most probably later this year.

"A meaningful recovery in the sector is not in sight yet. But panel restocking is expected to begin in late May because of seasonal demand in the third quarter," said Ji Mok-hyun, an analyst at Meritz Securities.

Japan earthquake have a positive impact

"Japan's earthquake will have a positive impact on panel supply-demand balance by curtailing production. But it is not good in terms of LCD parts supply, leading to a parts shortage. The impact is neutral."

LG Display, which kicked off earnings for major Asian LCD makers ahead of results due from Samsung Electronics and AU Optronics, expects TV panel prices to stop sliding and rebound from the mid second quarter, while overall shipment volume of flat screens was likely to rise by late-teen percentage from the previous quarter.

Hit by prolonged oversupply of panels since the summer of 2010, most LCD makers from sector leader Samsung to Taiwan-based AU Optronics are expected to report losses for January-March.

Philips to transfer its TV business into joint venture

Highlighting soft demand from TV makers, Philips Electronics said on Monday it would transfer its TV business into a joint venture with TPV Technology after reporting weaker-than-expected quarterly net profit.

The Dutch consumer electronics company is one of the main clients of LG Display along with LG Electronics and Toshiba Corp.

LG Display, which competes with Samsung, Sharp and Taiwan's Chimei Innolux, said January-March operating loss was 239 billion Korean won ($220 million), worse than the consensus forecast of a loss of 123 billion won polled by Thomson Reuters I/B/E/S.

But the result was broadly in line with StarMine's SmartEstimates, which places more weight on recent forecasts by top-rated analysts and expected a downside surprise of 92 per cent to 235 billion won in the first-quarter operating loss.

HSBC lowered its growth forecast for the global LCD TV market last week to below 10 per cent this year, as most households in advanced countries have already traded their bulky tube TV sets to flat-screens.

In Japan, Sharp suspended production at two TV panel plants last week until early may due to slumping domestic demand for TVs and shortages of a gas used in panel production.

LG Display shares have fallen about 9 per cent so far this year, lagging a 4 per cent gain in the wider market, which hit a record high this month. Ahead of the results, LG shares closed down 0.6 per cent in a broader market down 0.1 per cent.