Production
Second-quarter net income was 302 billion won ($239 million), almost double the 161 billion won median estimate of 22 analysts surveyed by Bloomberg News. Third-quarter prices will probably increase “gradually” from the preceding three- month period, the Seoul-based company said in a statement today.
Sales climbed 16 percent to a record after government subsidies helped spur television sales in China, leading Japans Sharp Corp. to raise production capacity and Taiwanese panel makers to predict higher revenue in the past week. LG said today shipments will probably increase by a “mid-teens” percentage this quarter and the company raised its capital spending plans for 2009 to meet demand for flat-screen TVs.
“The second-quarter figures are impressive,” said Chang In Whan, president of Seoul-based KTB Asset Management Co., which manages the equivalent to $7.9 billion. “The recovery in LCD prices in the second half may not be as strong as the first half as the impact of the Chinese governments subsidies fade.”
LG Display rose 0.9 percent to close at 34,800 won in Seoul before earnings were reported. The stock has surged 66 percent this year, beating the 27 percent gain by the benchmark Kospi index.
New Production Line
Net income, LGs first in three quarters, declined 60 percent from a year ago because of lower LCD prices. Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 76 percent to 218 billion won, exceeding the 146 billion won median estimate in the analyst survey.
LG Display, which said last month it isnt fully meeting customer orders because of stronger demand, announced yesterday it will invest 3.27 trillion won to build a new LCD production line. In June, Austin, Texas-based researcher DisplaySearch raised its full-year estimate for the global LCD television market, citing demand from China and as more consumers replace their bulkier glass-tube sets.
Global revenue from LCD TVs will drop 6 percent this year to $76 billion, according to DisplaySearch, higher than its previous estimate of $66 billion. Worldwide LCD TV shipments will rise 21 percent to 127 million units, compared with an earlier prediction of 120 million, the research firm said.
Industry leader Samsung Electronics Co. and AU Optronics Corp., the largest producer in Taiwan, are scheduled to report earnings next week.
Raising Capacity
Sharp, Japans largest LCD maker, said July 9 it will raise the production capacity of its main plant by about 10 percent to respond to increasing demand. AU and Chi Mei Optoelectronics Corp., Taiwans second-biggest LCD maker, said last week sales will rise in the current quarter from the three months ended June as demand from China and a shortage of glass substrates used to produce the panels boost prices.
Corning Inc., the worlds biggest maker of glass for flat- panel TVs, said last month second-quarter LCD glass volume doubled because of increased sales of LCD TVs. Cornings capacity in the third quarter will be “constrained,” as demand will be higher than the companys production ability, it said.
Prices of 37-inch LCD TV panels rose 4.2 percent in the second half of June from the second half of March, Taipei-based researcher WitsView Technology Corp. said on June 22. Prices of 19-inch monitor panels rose 14 percent, while the 15.4-inch notebook panel gained 7.7 percent, according to WitsView.
Prices of most LCD panels used in notebooks, computer monitors and TVs increased in the first half of this month compared with the second half of June, according to Bank of America-Merrill Lynch.
LG Displays capital spending for this year will be between 3 trillion won to 3.5 trillion won, compared with an earlier budget of about 2.5 trillion won, the company said.