Flat screen maker LG.Philips LCD Co. Ltd. (LPL) is expected to report its fourth straight quarterly loss on Tuesday due to continuing declines in LCD panel prices and low seasonal demand in the first quarter. According to analysts, the world’s second-largest manufacturer of LCDs should return profitable beginning in the second half of 2007, as demand picks up for items such as LCD monitors, notebook PCs and LCD TVs.
LPL has limited new capacity investments and have kept inventory very tight to maintain profit margins on LCD panels. These activities have raised the company’s share prices recently. Last year, after heavy investments toward fab expansions, LPL posted a loss of about US$820 million. Expectations are for LPL to announce a net loss of 235 billion won (about US$251 million) in Q1’07. In Q4’06, LPL posted a 174 billion won net loss. Consolidated sales are expected to be 2.58 trillion won versus 2.47 trillion in Q1’06 and 3.07 trillion won in Q4’06.
LPL’s average selling price (ASP) declined 12% in Q1’07, a bit more than the 1% drop experienced in Q4’06. For all of 2007, LPL is expected to post a net loss of 195.7 billion won, substantially less than the net loss of 769.3 billion won 2006.
The LCD market in 2H’07 is expected to be extremely tight or be in shortage. ASPs will continue to fall throughout the year, but in certain sizes prices will stabilize. Traditionally, TV set makers have had the upper hand in price negotiations, but with a tightness in supply, that might change by mid-year.