LG.Philips Swings to Profit, Confident on 2008

Flat screen maker LG.Philips LCD reported its highest ever quarterly profit on Monday, rebounding from a year-ago loss, and predicted 2008 profitability would improve from 2007.

Makers of liquid crystal display (LCD) panels are set to enjoy a booming flat-screen TV market and continuing solid demand and tight supplies in 2008, after a strong earnings recovery last year, which was mainly due to investment cutbacks.

China is seen leading global LCD TV market growth, as consumers with increased buying power replace old, bulky tubes to view this summer's Beijing Olympic Games.

LG.Philips, the world's No. 2 maker of large-sized LCDs, reported a 760 billion won ($811.2 million) October-December net profit, soundly beating a forecast for 665.6 billion won from analysts surveyed by Reuters.

The results topped the company's previous record of 701 billion won posted in the second quarter of 2004 and marks a strong turnaround from the 174.3 billion won year-ago loss, when prices sagged on weak computer and TV sales.

Quarterly sales on a consolidated basis rose 41 percent to 4.3 trillion won.

LG.Philips, which competes with leader Samsung Electronics and Taiwan's AU Optronics, said its average LCD selling prices rose about 1 percent in the fourth quarter after rising 7 percent in the third.

It forecast average selling price of its LCD panels would fall by only a mid-single digit percentage this quarter.

Analysts say LCD makers will likely see only moderate price erosion this quarter and then enjoy a strong year, as scheduled new production lines will affect the market in 2009 at the earliest.

As LCD TVs grow in popularity, TV makers have been setting ambitious sales goals, but securing enough screens may prove a challenge.

LG.Philips is expected to nearly double its net profit this year to 2.19 trillion won, according to Reuters Estimates.

Shares in LG.Philips, valued at about $17 billion, fell 0.78 percent to end at 44,400 won before the earnings announcement. The stock rose 13 percent in October-December, outperforming a 2.5 percent fall on the wider share market.