Flat screen maker LG.Philips LCD Co Ltd is set to swing to a profit in the second quarter, ending a streak of four straight losing quarters, as panel prices bottomed out and demand began to pick up.
LG.Philips, the world's second-biggest maker of large-sized LCDs, is set to reap even bigger profits in the third quarter on growing demand for flat-panel televisions and wider screens for PCs and laptops, analysts said.
LG.Philips is forecast to report a 138.2 billion won ($150.1 million) net profit in the quarter ended June, according to a median forecast from eight analysts polled by Reuters.
That would mark an improvement from a 322 billion won net loss a year earlier and a 169 billion won shortfall in the previous quarter.
Hit by tumbling prices and oversupply last year, the liquid crystal display (LCD) industry has recovered quickly in recent months as makers sharply curtailed new investment to focus on margins.
Meanwhile, more consumers replaced their bulky cathode-ray tube sets in favour of sleek and increasingly affordable flat screens. "A faster-than-expected rebound in panel prices helped earnings recover quickly in the second quarter," said Park Young-joo, an analyst at Woori Investment & Securities. "Shipments also came stronger than earlier thought."
According to Lehman Brothers, prices of notebook screens rose by 8 percent in the second quarter, while computer monitor prices jumped 20 percent.
Forty two-inch TV panel prices remained unchanged after falling 10 percent in the first quarter, and 32-inch panel prices even rose 3 percent after falling 9 percent.
Analysts say the strength could continue in coming months as large TV panels consuming bigger glass areas are gaining popularity with consumers and as production ramp-up plans in the second half remain limited in scale. "LG.Philips turned to a profit starting May. Profits should more than double in the third quarter (from the second)," said Lee Min-hee, an analyst at Dongbu Securities.
LG.Philips competes with bigger home rival Samsung Electronics Co Ltd and Taiwan's AU Optronics Corp and Chi Mei Optoelectronics Corp. Sales on consolidated basis are expected at 3.22 trillion won, also up from 2.32 trillion a year earlier and 2.72 trillion won between January-March.
For all of 2007, the joint venture between LG Electronics Inc and Philips NV is expected to earn a 573 billion won net profit, reversing a 769.3 billion won loss in 2006, according to Reuters Estimates.
In Taiwan, AU is expected to report on July 26 a T$1.57 billion ($47.9 million) quarterly net profit, up sharply from T$182 million a year ago, according to Reuters Estimates. Chi Mei, which reports on August 2, is likely to swing to a T$1.76 billion profit after posting a T$944 million loss a year before.