Seoul, South Korea — LG.Philips LCD reported a net loss of $339 million and relatively flat sales of $2.4 billion during its second quarter, ended June 30.
Net loss in the second quarter $339 million is compared with a net profit $43 million the same time last year.
Sales in the second quarter of $2.4 billion marked a 0.3 percent increase in sales vs. $2.43 billion in the same quarter last year. Essentially flat sales was the result of an industrywide decline in average selling prices across the TV, monitor and notebook segments, as well as less than expected sales volume growth and overcapacity, according to the company.
EBITDA (earnings before interest, taxes, depreciation and amortization) in the second quarter of 2006 was $256 million, a year-over-year decline of 45 percent from $466 million the same time last year.
“The second quarter was a difficult quarter for the company, as we were significantly impacted by much greater than expected industrywide pricing weakness,” said Bon Joon Koo, vice chairman/CEO of LG.Philips LCD.
He added, “The decision to continue evaluating any further investment in a next generation and invest in a multi-purpose Gen 5.5 facility, which will be housed in our P8 facility, demonstrates our resolve to both adapt to changing market conditions and to make timely investments to meet our customers' forthcoming needs, particularly in the expanding wide format notebook and high-end monitor segments.”
Ron Wirahadiraksa, president/chief financial officer of LG.Philips LCD, commented, “We are disappointed with our financial performance in the second quarter. As we announced in June, we are addressing an increase in inventory levels during a period of overcapacity, primarily in the LCD TV segment, by temporizing production. We will continue to control inventory levels going forward.”
He noted that the company expects pricing to stabilize and it anticipates “sustained growth in consumer demand for LCD TVs, in the second half of 2006, particularly in the fourth quarter. For the third quarter of 2006, we expect our area shipments to increase quarter-on-quarter by a mid- to high-20s percentage, driven by continued growth in the expanding LCD TV segment, continued ramp up at our P7 facility and the stabilization of pricing.”
For this financial report the exchange rate between the Korean Won (KRW) and the U.S. dollar was based on the June 30, 2006 rate of KRW 948.5 per U.S. dollar.