UPDATE 2-LG Display posts record profit, mild downturn ahead

* Expects panel prices to fall, shipments to rise in Q4

* Operating profit at record, driven by strong LCD prices

* Seasonal slowdown to hurt, low inventory to help -CFO

* Shares underperformed KOSPI recently on outlook concerns (Adds analyst, fund manager comments)

By Rhee So-eui and Marie-France Han

SEOUL, Oct 15 (Reuters) - The world's No.2 maker of liquid crystal display screens, LG Display (034220.KS), offered an upbeat outlook after posting a record profit on higher prices, saying an industry downturn would be milder than expected.

The upcoming seasonal slowdown, from late 2009, is set to weigh on the cyclical sector's profits until the first quarter of next year, but could be milder than in previous years, thanks to low inventory and expectations manufacturers will curb output.

"I don't think panel prices will plunge in the coming quarters as much as the market fears," said James Kim, an analyst at Nomura Securities.

"Demand appears to be stronger than expected, given China's buying spree during the recent holidays and Intel's optimistic view. I see more upside room for LG Display share prices."

The LCD industry has managed to recover quickly from a severe slowdown in late 2008, riding largely on the popularity of flat-screen TVs while a shortage of key glass input has sped a rebound in panel prices.

But LCD prices have trended down since late September.

LG Display competes with sector leader Samsung Electronics (005930.KS) of South Korea and Taiwan's AU Optronics (2409.TW).

"The oversupply this time will likely be less severe in depth than in the past year," LG Display's chief financial officer James Jeong told an investor meeting, referring to a steep downturn that hit the whole industry last year.

LG Display (LPL.N) posted a record 904 billion won ($780.5 million) in operating profit in July-Sept as strong demand and raw material shortages boosted prices for TV and computer screens.

It posted an EBITDA (earnings before interest, taxes, depreciation and amortisation) margin that jumped to 28 percent from 19 percent in the second quarter.

"We see weak earnings momentum for LG Display through the first half of next year," said Jang Huh, managing director at Prudential Asset Management. "It is hard to say at this point how the industry will fare in the second half of next year."

Still, others remained upbeat on LG Display's ability to recover in the second half of 2010. Jeff Kim, an analyst at Hyundai Securities, expects LG Display to post a full-year EBITDA margin of about 20 percent in 2010, similar to the 2009 figure.

Q4 SHIPMENTS RISING, PRICES FALLING

LG Display expects average LCD prices to fall gradually in the fourth quarter, after rising 12 percent in the third. Shipments in October-December will probably grow by a high single digit percentage from the third quarter, it said.

For a graphic on LG Display's results, click on: here

For company statement, click on: r.reuters.com/waj93f

July-September net profit came in at 559 billion won, lower than a forecast of 798 billion won, but still a sharp improvement from 295 billion won in the year-earlier quarter.

Consolidated sales were at 5.97 trillion won, above a forecast of 5.85 trillion won and up 55 percent from a year ago.

LG Display shares have fallen 10 percent since the end of August, lagging the wider market's .KS11 gain of 4 percent due to concerns over weakening earnings momentum. ($1=1158.2 Won) (Reporting by Rhee So-eui and Marie-France Han; Editing by Jonathan Hopfner and Clarence Fernandez)