LG Philips LCD has cut its 2Q 2006 guidance for shipments and its EBITDA margin forecast. The company, a joint venture between South Korea“s LG Electronics and Philips Electronics NV, now says it exp…
LG Philips LCD has cut its 2Q 2006 guidance for shipments and its EBITDA margin forecast. The company, a joint venture between South Korea“s LG Electronics and Philips Electronics NV, now says it expects shipments for the 2Q 2006 to rise in the mid-teens from the previous quarter, down from its previous estimate of mid- to high-twenties growth. The panel maker said it expects its LCD TV shipment for the quarter to grow about 25% quarter-on-quarter, also down from its earlier projection of 50% growth. It also cut its EBITDA margin forecast to about 10%, compared with its original estimate of approximately 20%. The company cited sharper-than-expected price reductions and higher-than-expected inventory levels as the principal reasons for the revisions. The firm projected that average selling prices per square meter of glass in the 2Q 2006 will fall by a figure in the mid-teens from a quarter earlier, compared to a mid-to-high single digit decline in earlier guidance. President and chief financial officer Ron Wirahadiraksa said the industry suffered price declines across all product categories and its inventory levels rose to about four weeks due to weak seasonal demand. “Given these factors, we have decided to temporarily adjust the amount of production to address inventory concerns and better balance our short term supply with demand. Furthermore, we are reviewing our total capacity plans for the year and beyond”, Mr. Wirahadiraksa said. The company said it plans to release its 2Q 2006 earnings results on 11 July 2006.