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LG.Philips Sales, Earnings Jump

1/12/2006 09:19:00 AM Eastern

Seoul. South Korea — Flat-screen maker LG.Philips LCD posted a 53 percent increase in fourth-quarter 2005 sales and a net profit for the three months that came in nine times larger than the amount recorded year-on-year.

With shipments of large TV panels increasing, LG.Philips sales reached $2.9 billion in the fourth quarter, ended Dec. 31, up from $1.9 billion in the same three months in 2004.

Fourth-quarter sales were led by the continued growth in demand for large and wide LCD television and notebook panels, which softened the impact of a challenging monitor demand, said the company.

LG.Philips, one of the world’s largest TFT-LCD panel manufacturers, reported desktop monitors accounted for 38 percent of fourth-quarter revenue, TVs held 34 percent, notebooks 24 percent and other applications 4 percent. This compares with 45 percent, 29 percent, 22 percent and 4 percent, respectively, in the third quarter of 2005, said the company.

Boosted by fourth-quarter LCD demand and better margins, LG.Philips reported operating income of $331 million, up from $2 million in the same three months the prior year. Net income was $325 million, compared with $34.6 million in the fourth quarter a year ago.

For the 12 months, sales hit $10.4 billion, up from a year-ago $8.6 billion.

However, operating income for the year decreased to $483.9 million, from $1.8 billion in 2004, and net income slipped to $532.6 million, from $1.7 billion the previous 12 months.

Despite the overall unit sales growth and better margins LG.Philips enjoyed in the fourth quarter, industry experts report the company could be adversely affected by decreasing prices of panels in 2006 and the possibility of a supply glut this year as manufacturers continue to increase capacity, cutting into the healthy margins reported at the end of 2005.

LG.Philips, the joint venture between Korea’s LG Electronics and Dutch-maker Philips, said it is looking forward to an “exciting growth opportunity” in notebooks, particularly the large and wide product segments, in 2006.

The company expects to increase first-quarter shipments, fueled by the rapidly expanding LCD television segment, but also suffer a decrease in average selling price, due to weaker pricing for the monitor and notebook segments. Industry shipment growth is expected to slow early this year, compared with the final months of 2005.

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