LG sees slower TV market growth in '09

SEOUL (Reuters) - South Korea's LG Electronics Inc (066570.KS) said on Thursday the flat screen television market was poised for much slower growth in 2009, but maintained high growth targets for its own plasma and liquid crystal products.

"We definitely expect a slowdown in the growth of the TV market," said Simon Kang, president of LG's display division, which makes plasma displays and flat screen TVs.

Kang also told reporters LG expected significant declines in TV prices in the second half as falling panel prices allow manufacturers to cut costs while competition heats up.

Despite the bleak outlook, Kang said LG aims to raise its North American market share in liquid crystal display (LCD) TVs from 7-8 percent in 2007 to 12-13 percent by the end of 2008, compared to a goal of "more than 10 percent" given earlier this year.

The executive also said LG would not follow bigger rivals Sony Corp (6758.T) and Samsung Electronics Co Ltd (005930.KS) into a price war in the key North American market.

"If you compete in the low end you end up damaging your brand and your profitability," Kang said.

Kang said the recent Euro 2008 soccer tournament and the ongoing Beijing Olympic games had "no effect whatsoever" on television sales, contrary to the lofty hopes expressed by the industry earlier this year.

"Because of the economic slowdown, the Chinese market has been very difficult."

LG's display division contributed 29 percent of the company's total sales in the second quarter -- but less than 5 percent of overall operating profit.

The division posted a modest 1 percent operating profit margin in the second quarter, which was still a vast improvement from the 5 percent loss margin posted in the year-ago period.

KEEPING PLASMA

Kang maintained his company's steadfast commitment to plasma screens, a technology that has fallen out of favor after bigger and more prolific LCD companies invaded the market for large-size displays.

After a brief recovery earlier this year, triggered by a shortage of LCDs, plasma screens are now hanging on for dear life amid heightened competition in the flat screen market along with the worldwide slowdown.

Kang said his division now aimed to produce only 4.2 million plasma modules for 2008, down from an initial yearly target of 6 million units set at the beginning of the year.

"There is still a lot of room to improve profitability," said Kang. "Our current position is that we are keeping the plasma business."

(Reporting by Marie-France Han and Rhee So-eui; Editing by Jonathan Hopfner)