LG Display Co., the world’s second- largest maker of liquid-crystal displays, reported a 62 percent drop in third-quarter profit as slowing demand for televisions and computer monitors drove down panel prices.
Net income dropped to 224.2 billion won ($198 million) from 595.3 billion won a year earlier, Seoul-based LG Display said today. Profit surpassed the 145 billion won average estimate of seven analysts surveyed by Bloomberg News.
The results come two weeks after bigger rival Samsung Electronics Co. reported profit that missed analysts’ estimates and fueled concern global spending on electronics is slowing. LG, which makes displays for Apple Inc.’s iPad, may post a loss in the fourth quarter as weak demand and oversupply of panels reduce prices further, according to analysts.
“Panel prices are likely to continue falling until the end of the fourth quarter,” Lee Seung Jin, a Seoul-based analyst at Tong Yang Securities Inc., said before the announcement. “It’s not that the market didn’t grow well, but demand expectations were too high, and it led to a supply glut.”
Samsung, the world’s largest maker of LCDs and TV sets, this month reported third-quarter profit that was about 200 billion won shy of the average analyst estimate compiled by Bloomberg. Sony Corp., the world’s third-largest television maker, said it’s concerned growth in demand may slow.
LCD Prices
LG Display’s sales increased 15 percent to 6.7 trillion won, higher than the 6.21 trillion won median of eight analyst estimates compiled by Bloomberg. Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 73 percent to 182.1 billion won, compared with the 150.8 billion won average of analyst estimates compiled by Bloomberg.
LG Display fell 2 percent to close at 39,450 won in Seoul before earnings were announced.
The average price of the company’s panels probably fell 5.8 percent last quarter and may decline 5.9 percent in the fourth quarter, according to an estimate by Taurus Investment & Securities Co.
Global LCD television shipments may increase 24 percent from last year to 180 million units in 2010, Bank of America Corp.’s Merrill Lynch said in an Oct. 19 report, lowering its previous growth estimate of 29 percent. Merrill cited weak demand in the U.S. and Europe, as well as high inventory for the revision.
“LG Display appears the most vulnerable due to high exposure to TV,” as about 60 percent of the company’s revenue comes from sales of television panels, Merrill said in the report.
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