Samsung, LG.Philips LCD Set to Post Record Results
By Kim Yoo-chul
Staff Reporter
Expectations are mounting that Samsung Electronics and LG.Philips LCD (LPL) will post record quarterly operating income on the back of a rare rise in monthly prices of liquid crystal display (LCD) panels.
Local brokerages are painting a ``rosy outlook’’ as many orders from China for the Lunar New Year holiday will offset slow demand for the panels in North America, the world’s largest consumer electronics market.
According to industry estimates, prices of 19-inch and 22-inch LCD panels and even larger 32-inch and 37-inch panels increased by $1 and $2, respectively, in early November. Prices for the panels used in laptop PCs and 42-inch TV sets were nearly unchanged from a month earlier.
Analysts say such a ``rare pace’’ was a reflection of tight supply in the industry, which has suffered price falls in October and November for the past two years, amid more orders for plasma display panels (PDP).
``Driven by cost-cutting measures and price increase, LPL is highly likely to reap a quarterly record in the fourth quarter, exceeding the previous record of 771 billion won in the second quarter of 2004,’’ said Park Young-joo, an analyst from Woori Investment & Securities. LPL’s third-quarter operating profit reached 693 billion won, compared with a loss of 382 billion won a year ago.
Goodmorning Shinhan Securities and Hyundai Securities predicted that Samsung Electronics’ LCD division will post a maximum of 900 billion won in operating profit in the last quarter of this year. The division’s profit margin rose to 17 percent in the third quarter from 9 percent a quarter earlier with quarterly sales exceeding four trillion won for the first time.
But market observers still worry over price fluctuations of the panels as major LCD makers are reportedly preparing huge discount sales in the run-up to the ``Black Friday’’ season in North America, starting on Nov. 23.
``Although Samsung’s rival Matsushita is likely to dump LCD TV sets with lower prices due to massive inventory, I think the panel prices will maintain a strong pace as steadily strong orders are expected thanks to the Lunar New Year holiday and approaching Beijing Olympics,’’ said Kim Dong-won, an analyst of Hyundai Securities.
According to DisplaySearch, a market research firm, expenditures for LCD lines will rise to 30 percent from 20 percent this year.