LG.Philips Q1 Sales Jump 20%
By Jeff Malester -- TWICE, 4/24/2006
Seoul, South Korea — Increasing movement of large-size LCD panels boosted overall first-quarter sales at flat-panel maker LG.Philips LCD by 20 percent, climbing to $2.5 billion, up from a year-ago $2.1 billion.
The company moved into the black in the first quarter, recording $49 million in net income, compared with a loss of $81 million in the same period last year. The increase was attributed to growing sales of TV panels.
However, the results of sequential quarters were not as impressive, with sales dropping 17 percent in the first quarter, compared with the fourth quarter of last year, when LG.Philips reported $3.1 billion in sales. First-quarter net income was down from the $338 million recorded in the fourth quarter of last year, due to weaker panel prices.
The year-on-year revenue increase was attributed mainly to increased demand for LCD TVs. TFT-LCD panels for televisions accounted for 45 percent of revenue in the first quarter, up from 34 percent in the fourth quarter of last year. Desktop monitor percent of revenue dropped to 30 percent in the first quarter, down from 38 percent last year; notebooks were 20 percent, down from 24 percent; and other applications edged upward to 5 percent, from 4 percent.
Total cost of goods sold increased 9 percent year-over-year in the first quarter, rising to $2.4 billion, while cost dropped 7 percent in sequential quarters primarily due to lower shipments and better-than-expected cost reduction at the company's facilities.
LG.Philips said it expects LCD selling prices to drop by a mid-to-high single-digit percentage in the second quarter, following a 7.5 percent decrease in the first quarter. A panel glut is expected to continue through the year, reducing margin, said the company. At the same time, competitors are boosting capacity in the hope of an increase in demand for large LCD TVs.
Capital spending in the first quarter at LG.Philips increased to $870 million, up from $466 million in the same three months the prior year.
LG.Philips is a joint venture between South Korea's LG Electronics and the Dutch company Philips NV.
