UPDATE 3-LG Display sees LCD market near bottom after weak Q3

* Q3 op profit 182 bln won vs 150 bln won consensus

* Sees pace of decline in panel prices easing in Q4

* Falling TV panel prices, weak U.S. demand biggest concern

* Shares end 2 pct lower; outperform market this year

(Adds comments)

By Miyoung Kim

SEOUL, Oct 21 (BestGrowthStock) – LG Display (034220.KS: ), the
world’s No.2 LCD flat screen maker, signaled the sector was
nearing a bottom as the pace of panel price falls slows, after
reporting its worst profit in six quarters.

The profit outlook remains grim for the liquid crystal
display (LCD) sector, as TV makers demand price cuts to revive
demand in the key year-end holiday season.

Shipment growth is also weakening as retailers are not keen
to stock up on TVs and computers, worried about being saddled
with inventory in a struggling global economy.

“The LCD market has hit the bottom, but it will take time
for LCD makers to turn around. Their earnings will remain weak
until the fourth quarter,” said Song I-jin, a fund manager at
Hi Asset Management said.

LG Display, which kicked off earnings for major Asian LCD
makers including sector leader Samsung Electronics (005930.KS: )
and Taiwan’s AU Optronics (2409.TW: ), beat market forecasts on
strong demand from smartphones and tablets.

It expects the market to hit the bottom in the current
quarter and gradually recover the following quarter.

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For graphics on earnings: http://link.reuters.com/jef59p

For StarMine comparative data: http://r.reuters.com/waz49p

For analysts views, [ID:nTOE69K04V]

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“”TV producers and other set makers are taking a cautious
approach on weak demand, but inventory is returning to a normal
level, and we expect the market to bottom out in Q4 and the
overall outlook will improve from late in the first quarter of
next year,” LG Display Chief Financial Officer Jung Ho-young
told analysts.

LG controls about a quarter of global LCD TV market and
closely follows Samsung, which has around a 27 percent share on
a revenue basis.

Shares in LG Display, run by Chief Executive Kwon
Young-soo, ended 2 percent weaker ahead of the results in a
broader market (.KS11: ) up 0.2 percent.

Media-friendly Kwon frequently talks of his desire to
become No.1 in LCD manufacturing and had sent his staff to the
world’s highest peaks such as Annapurna and Kilimanjaro to
toughen them and ready to take on challenging goals such as
being the No.1.

LG Display’s July-September operating profit came in at 182
billion won ($162.2 million) versus a consensus forecast of 150
billion won polled by Thomson Reuters I/B/E/S. The profit was
the lowest for the firm since the first quarter of 2009.

Third-quarter profit (Read more your timing to make a profit.) was down 72 percent from 662 billion
won profit a year ago and showed a fall of 75 percent from the
preceding quarter.

BETTER THAN RIVALS

Demand for LCDs turned weaker last quarter but LG Display
outperformed rivals and showed strong shipment growth last
month due to its supply deals with Apple (AAPL.O: ) for iPhone
and iPad tablet, according to industry tracker DisplaySearch.

Analysts estimate LG Display has been running at 90 percent
of its capacity since August and rivals in Taiwan are making
deeper cuts of around 20 percent. But they may have to reduce
output further due to faltering demand.

“LCD TV panel demand is as bad as it was during the
financial crisis in 2008… The problem is that clients ask for
big price concessions because they know about the oversupply
situation,” said DisplaySearch analyst David Hsieh.

The global LCD market has been in oversupply since July,
with supplies in TV sector far outpacing demand by some 30
percent, according to research firm iSuppli.

LG Display’s panel shipments rose 10 percent in September
from August, when delivery from Chimei and AU Optronics fell
3-4 percent.

The company’s operating margins tumbled to 3 percent from
11 percent a year ago, hit by steeper-than-expected price falls
for LCDs, which are now trading close to production costs.

Panel prices, which have fallen around 30 percent on
average from April to September, are set to decline further, as
TV producers have aggressively cut prices to boost demand,
increasing price pressure on most panel makers.

That’s a big concern for LG Display since TV panels
generate more than half of the company’s revenue. It counts
Apple and LG Electronics (066570.KS: ) among its customers.

The shares have rallied about 23 percent from a nine-month
low hit in late August versus a 7 percent rise in the market.
($1=1122.0 Won)
(Additional reporting by Hyunjoo Jin; Editing by David Chance
and Anshuman Daga)

UPDATE 3-LG Display sees LCD market near bottom after weak Q3