UPDATE 2-LG Display sees smartphone demand cushioning TV's seasonal Q1 lull

Thu Jan 23, 2014 6:55am EST

* Operating profit 257 bln won vs 238 bln won analyst estimate

* Drop in TV LCD panels offsets rebound in iPhone screen sales

* Expects screen shipments to fall 10-15 pct in Q1 vs Q4 (Recasts, adds analyst comment, Apple-China Mobile iPhone sales)

SEOUL, Jan 23 (Reuters) - LG Display Co Ltd expects a boost in first-quarter shipments to clients such as Apple Inc to cushion the impact of a seasonal lull in TV screen sales, after riding out a fourth quarter in which profit halved.

The South Korean manufacturer, which competes with Sharp Corp, will likely get a lift in smartphone screen sales as Apple starts selling its iPhones this month with China Mobile Ltd, the world's biggest carrier by subscribers.

The sister company of LG Electronics Inc benefited from a rebound in iPhone sales during the holiday season, though it was not enough to offset the impact of soft sales of TV sets which bring in most of its revenue.

Operating profit at LG Display, the world's biggest maker of liquid crystal displays, fell 56 percent on year in October-December to 257 billion won ($241 million). That compared with a 238 billion won mean estimate of 31 analysts polled by Thomson Reuters I/B/E/S.

Shares of LG Display, worth $11.15 billion, closed down 0.4 percent ahead of the earnings release, compared with the benchmark index which was 1.2 percent lower.

"We expect profit in the first quarter of 2014 to decline quarter-on-quarter due to traditional seasonal decline in panel shipments and prices," LG Display Chief Financial Officer Don Kim said in a statement.

The company put the decline in shipments at around 10 percent to 15 percent, and said that prices will fall but at a slower pace.

"The guidance is a relief, as some had feared LG Display may swing to a loss in the first quarter as TV panel prices continue to fall," said IBK Securities analyst Eo Kyu-jin, who has a Buy recommendation on LG Display stock.

"With Apple increasing iPhone sales in China and reportedly planning wider screen products, LG Display will be able to offset weakness in its TV panel business and keep margins steady this year."

LG Display earns most of its revenue from TV screens, but sluggish TV sales have thwarted efforts to raise screen prices.

LCD TVs have supplanted older technology in advanced economies so sales have plateaued, and sales in emerging economies such as China are primarily of cheaper, lower-margin models.

To counter, LG Display, like competitor Samsung Electronics Co Ltd's Samsung Display, has been pouring funds into next-generation technology to tempt consumers to upgrade.

That hasn't stopped LG Display's revenue from TV screens falling to 37 percent of total revenue in October-December from 43 percent a year earlier.

On the other hand, revenue from screens for smartphones and tablets - such as Apple's iPhone and iPad - rose to 35 percent from 31 percent.

Apple sold a record 55 million iPhones in the fourth quarter from 33.8 million in the third, according to analyst estimates.

But LG Display's share of the spoils has been declining as yen-weakening policies of Japan's prime minister make the panels of Sharp cheaper.

LG Display supplied around 23 percent of iPhone screens in the third quarter compared with 57 percent in the second quarter of 2012, according to brokerage E*Trade Korea.

Over the same period, Sharp's supply jumped to 40 percent from 3 percent, the brokerage said. (Reporting by Miyoung Kim; Editing by Christopher Cushing)