LG Display, Taiwan LCD makers profits to sag

SEOUL (Reuters) - South Korean flat screen maker LG Display Co Ltd and two smaller Taiwanese rivals are expected to post sharp falls in profits in the third quarter, hit by weakening demand and falling panel prices.

As the global financial crisis hits consumer demand, television and monitor screen makers will post even more losses in the coming quarters despite efforts to control costs and output, analysts say.

Consumers look to be in no rush to spend on big ticket items such as liquid crystal display TVs in the run up to the holiday season, even as panel prices slide.

"The economy is so weak. At this rate, who would buy a TV at the year-end?" said Lee hak-moo, an analyst at Mirae Asset Securities.

The LCD industry's downturn comes earlier than expected after a strong first half, when supply was tight and prices held firm.

"There's no visibility in earnings," said Jeff Kim, an analyst at Hyundai Securities. "Things will turn up only in the second half of next year."

LG Display, the world's second-biggest LCD panel maker, is forecast to report a 191.5 billion won ($134 million) net profit in the third quarter to September 30 when it reports next Tuesday, according to 8 analysts surveyed by Reuters.

That is down from 524 billion won earned in the year-earlier period and 759 billion won in the second quarter.

Consolidated third-quarter sales are expected at 3.93 trillion won, steady from 3.95 trillion won a year earlier.

LG's average panel price likely fell nearly 20 percent in July-September after losing only 5 percent in the previous quarter, analysts estimate.

LG trails domestic rival Samsung Electronics Co Ltd but ranks ahead of Taiwan's AU Optronics Corp and Chi Mei Optoelectronics Corp.

AU is expected to post a third-quarter net profit of T$6.5 billion ($201 million) on October 23, down from T$22.6 billion a year earlier and T$20.4 billion in the second quarter, according to Reuters Estimates.

Chi Mei is set to report a T$4.2 billion net profit for the April-June quarter on October 24, down from T$13.7 billion a year earlier. It earned T$13.7 billion in the second quarter.

OUTPUT CUTS

Except for top maker Samsung, major LCD manufacturers have reduced output in recent months, hoping tighter supplies could reverse the price drop trend.

But demand has failed to pick up.

"Demand will be weaker than expected in the fourth quarter. Makers have no option but to continue with output cuts," said Park Sang-Hyun, an analyst at HI Investment & Securities.

To make matters even worse, the industry is expected to see up to nine new large production lines coming next year.

"The question is how the market will digest new supplies, especially during the slow first half," Hyundai's Kim said.

Shares in LG Display, worth about $6.4 billion in market value, fell 24 percent in the third quarter, compared with a 13.5 percent loss in the broader market.

($1=1429.5 Won=32.41 Taiwan Dollar)

(Additional reporting Baker Li in TAIPEI; Editing by Louise Heavens)