Flat-panel maker LG Philips LCD Co Ltd has posted poor second-quarter results after warning in June that it was scaling back production in order to clear its inventory channel due to weak seasonal demand.
For the second quarter ending June 30, the Seoul, South Korea-based screen-maker posted a net loss of KRW 322bn ($340m) compared to a net profit of KRW 41bn ($43m) in the second quarter last year. Sales meanwhile fell 0.3% to KRW 2.315 trillion ($2.44bn) compared to KRW 2.308 trillion ($2.43bn) in the year-ago quarter.
We are disappointed with our financial performance in the second quarter of 2006, said CFO and president Ron Wirahadiraksa. As a result, the company is now taking initiatives to address the issues that are affecting our business. We are addressing an increase in inventory levels during a period of overcapacity, primarily in the LCD-TV segment by temporizing production.
The flat-screen joint venture between LG Electronics Inc and Philips Electronics NV is one of the world’s largest makers of liquid crystal displays. However, it has struggled with high inventories of LCD, which in turn drove down the average selling prices, impacting its bottom line. During the second quarter, LG Philips LCD said that the average selling price of LCD panels fell 18% from the first quarter, while shipments rose 17%.
It had been hoping for strong demand ahead of the football World Cup in Germany, but this failed to live up to expectations. That said, a slowdown in sales of monitors and notebook panels is common during the first half of the year.
Looking forward, the flat panel maker said it does not see much improvement in the third quarter, and said it expects the average selling price of LCD panels to fall by the mid-single digit percentage. However, it said it expects shipments of LCD panels to increase from the second quarter by a mid-to-high twenties percentage.