LG.Philips LCD Reports Q1 Results
Apr 13, 2005
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Display manufacturer LG.Philips LCD reported unaudited earnings results based on consolidated Korean GAAP for the 3-month period ended March 31, 2005.

Sales in the first quarter of 2005 increased by 7 percent to KRW 2,064 billion approx. U.S. $ 2,033 million) from sales of KRW 1,933 billion (approx. $1,904 million) in the fourth quarter of 2004. Sales decreased by 6 percent in the first quarter of 2005 from KRW 2,188 billion (approx. $2,155 million) in the first quarter of 2004 due to decreases in panel prices.

First-quarter 2005 sales comparisons, from both a sequential and year-on-year perspective, were also impacted by the Korean Won appreciation against the U.S. dollar during this period, the company reported.

Operating income in the first quarter of 2005 decreased to a loss of KRW 135 billion (approx. $133 million) from a profit of KRW 2 billion (approx. $2 million) in the fourth quarter of 2004 and from a profit of KRW 699 billion (approx. $688 million) in the first quarter of 2004.

EBITDA in the first quarter of 2005 decreased by 35 percent to KRW 269 billion (approx. $265 million) from EBITDA of KRW 412 billion (approx. $406 million) in the fourth quarter of 2004. EBITDA decreased by 72 percent in the first quarter of 2005 from KRW 976 billion (approx. $961 million) in the first quarter of 2004.

Net income in the first quarter of 2005 decreased to a loss of KRW 79 billion (approx. $78 million) from a net profit of KRW 35 billion (U.S. $34 million) in the fourth quarter of 2004 and from a net profit of KRW 628 billion (approx. $618 million) in the first quarter of 2004.

"Despite challenging market conditions, we continue to execute and perform in line with our plans," said Bon Joon Koo, CEO of LG.Philips LCD. "As a result of our ongoing, strong ramp-up of our sixth generation factory, 'P6,' we grew our total net display area shipped by 24 percent in the first quarter sequentially. Our seventh generation TFT-LCD facility, 'P7,' construction remains on track for mass production to begin in the first half of 2006. We continue to believe in the growth opportunities for the TFT-LCD industry, as LCDs evolve as the flat-panel of choice for HDTV content."

Revenues decreased by 6 percent to KRW 2,064 billion (approx. $2,033 million) in the 3-month period ended March 31, 2005, from KRW 2,188 billion (approx. $2,155 million) in the corresponding period of 2004 due to decreases in panel prices and the strong appreciation of the Korean Won, the company said.

The effect of the overall decrease in panel prices was partially offset by an increase in the volume of large and wide panels for notebook computers, desktop monitors, and TVs, LG.Philips reported. The increase in volume shipments was in response to the growing market needs for large and wide flat panels, especially for large-size TV panels, the company said. TFT-LCD panels for desktop monitors, notebook computers, TVs, and applications accounted for 56 percent, 18 percent, 22 percent, and 4 percent, respectively on a revenue basis in the first quarter of 2005, compared to 53 percent, 27 percent, 15 percent, and 5 percent, respectively on a revenue basis in the fourth quarter of 2004.

Overall, the display maker shipped a total of 958,000 sq m of net display area, a 24-percent sequential quarterly increase, with an average selling price per square meter of net display area of U.S. $2,085 in the first quarter of 2005. This represents a decline in the selling price per square meter of net display area of approximately 10 percent compared to the average of the fourth quarter of 2004, and a decline of 9 percent at the end of the first quarter as compared to the end of the fourth quarter of 2004.

"While the first quarter was challenging due to the strengthening of the Korean Won and a difficult pricing environment, we did see some positive emerging trends," said Ron Wirahadiraksa, CFO of LG.Philips LCD. "During this quarter, the average LCD size increased with the adoption of large and wide LCD monitors and the growing popularity of LCD TVs. To meet the increase in demand, we continue to focus on effectively using our resources to serve our customers and improve operational efficiency."

He continued: "As we have previously stated, we expect the industry supply/demand balance will begin to stabilize and then show signs of strengthening later in the year, mainly due to the growing demand for LCD TVs."

LG.Philips LCD expects to increase its output of net display area shipped at a double digit rate for the second quarter of 2005, compared to the first quarter of 2005, in order to meet the anticipated market growth and to satisfy customers' needs. At the same time, due to market pricing conditions, the company expects its ASP per square meter to decline at a single-digit rate at the end of the second quarter of 2005, compared to the end of the first quarter in 2005.

In terms of the EBITDA margin, the company anticipates mid- to high-teens for the second quarter of 2005.

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