Corning Expects 100 Percent Growth in Second Quarter

On June 30, 2009, Corning‘s CFO James Flaws updated the company’s guidance for second quarter sequential LCD glass volume growth. The company increased its expectations for second quarter LCD glass volume shipments from an original guidance of 50 percent, to a previously upgraded guidance of 75 percent or higher to now 100 percent for its wholly owned businesses. That means that Samsung Corning Precision Glass (SCP) is not included in that equation and is expected to grow 50 percent sequentially in the second quarter. The reason for the smaller growth is because SCP’s volume did not decline as much as the company’s wholly owned business in the first quarter. SCP mainly supplies to Samsung with smaller volumes going to LG Display. The company’s utilization rates are now at close to 100 percent. Asahi Glass Co., Corning’s major competitor, has also increased its utilization rates to 100 percent.

April LCD TV unit sales increased 22 percent in Europe and 77 percent in China. In Japan LCD TV unit sales were up 48 percent in Japan. I am assuming these are month-over-month growth rates. US LCD TV sales growth slowed somewhat in April but recent reports indicate a significant increase in domestic LCD TV sales in late May and through the first three weeks in June.

Corning kept is annual forecast of between 2.1 billion and 2.2 billion square feet of LCD glass for 2009 but Flaws indicated there could be an upside to the company’s forecast. In the third quarter Corning will not be able to manufacture and meet all the demand and will be forced to allocate glass based on customers with long-term supply agreements. Glass pricing in the third quarter for the company’s wholly owned business and SCP is expected to be flat compared to second quarter.

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