LONDON LCD maker LG. Phillips issued a downbeat updated second quarter 2006 forecast on Monday (June 12) and said it is reducing production to address inventory concerns and is looking "to better balance short term supply with demand." Total capacity plans are being reviewed for the year, and beyond.
The company said LCD TV shipment growth at the end of the second quarter is expected to be approximately 25 percent quarter-on-quarter, approximately 50 percent less than previously announced expectations.
Area shipments for the second quarter are expected to increase by a "mid-teen percentage" quarter-on-quarter, a decline from the previous guidance of a mid-to-high twenties percentage increase.
The company, a joint venture between Philips and LG Electronics, said second quarter EBITDA margin is now expected to be around 10 percent, a decrease from the previous guidance of about 20 percent.
LG. Philips also said it expects the average selling price per square meter of glass at the end of the second quarter to decline by a mid-teen percentage quarter-end on quarter-end, compared to the mid-to-high single digit decrease it suggested previously.
"Several factors affected the global LCD industry during the second quarter. First, the industry experienced larger than expected price declines across all product categories. In addition, while mid-to-long term demand for flat screen panels remains strong, we saw weaker seasonal demand during the second quarter, which has increased our inventory to about four weeks, a higher level than anticipated," commented Ron Wirahadiraksa, President and Chief Financial Officer of LG.Philips LCD.
The company plans to report final second quarter results on July 11.