LG.Philips sees stable price, turnaround

SEOUL (Reuters) - Flat screen maker LG.Philips LCD Co. Ltd. (034220.KS) expects prices of its television panels to fall at a much slower pace this year on stronger demand and limited output growth, a company executive said on Thursday.

After makers raced to ramp up production, the liquid crystal display (LCD) industry has suffered tumbling prices and oversupply since last year, but finally expects a cyclical upturn in the second half as low price tags encourage consumers to buy large, sleek TVs.

"TV panel prices in March-April were likely the lowest throughout the year," Champ Shin, vice president in charge of TV panel sales, said at the Reuters Global Technology, Media and Telecoms Summit.

He expected the decline for entire 2007 to be about 15 percent at worst, sharply slower than over 30 percent last year. A reduction in inventory since late last year and an expected seasonal demand growth in the second half, combined with a limited growth in fresh supply will help, he said.

"The prices will likely be stable for the time being. In the strong season, there's even some chance for a (price) rise," said Shin, who added August to October typically marks a peak in the business.

LG.Philips, the world's No. 2 maker of large-sized LCD panels, competing with bigger home rival Samsung Electronics Co. Ltd. (005930.KS) and Taiwan's AU Optronics Corp. (2409.TW), reported its fourth consecutive quarterly loss in the January-March quarter but expects to turn around to a profit during the current quarter.

"We are confident of a monthly break-even in the second quarter," Shin said, declining to elaborate on the timing. He expected the company to see gradual profit growth from then on.

Analysts polled by Reuters Estimates expect LG.Philips to earn 298.5 billion won ($321.6 million) in net profit this year, swinging from a 769.3 billion won loss in 2006. Lifted by a hope for earnings recovery, the company's shares rose 38 percent so far this year, outperforming the wider market's 12.6 percent gain.

WINNING MARKET FROM PDP

Helped by falling prices, LCD TVs are increasing their share in the popular 40-inch-and-larger TV market, winning a cut-throat price war against the competing plasma display technology.

But plasma makers still have an advantage in the 50-inch-and-bigger category, where few LCD makers supply.

"40- and 42-inch TVs are becoming a mainstream," Shin said. "In the below-50 inch TV market, the (LCD's winning) trend will go further and the advantage gap will become deeper."

Sharp Corp. (6753.T) and Samsung, partners with Sony Corp. (6758.T), have built a larger "eighth-generation" LCD line, seeking an early entry into the 50-inch-plus panel market.

LG.Philips LCD has yet to make a final decision on whether it would go ahead to build a proposed "5.5th-generation" production line, designed for both TV and monitor/notebook panels. Shin said the decision was expected soon, but did not elaborate.

Shin added LG.Philips will maintain its product mix between TV and other panels at around half and half.

LG.Philips shares ended 1.85 percent higher on Thursday, leading the KOSPI's 0.94 percent rise.

(Additional reporting by Kiyoshi Takenaka)