Former LCD Partners LG & Philips Suffer TV Sales Woes Amid Weak Demand

Jonathan Sutton

Sluggish demand for flat-screen HDTV displays in these economically difficult times has hit television sales hard. LG Electronics and Philips Electronics, two TV manufacturers who used to be partners in the production of traditional CRT (cathode ray tube) televisions and more recently LCD TV panels, have reported disappointing sales figures in their respective fourth quarter 2010 results.

LG-Philips LCD

On Monday, Dutch consumer electronics giant Philips revealed that declining sales in its TV operations resulted in lower-than-expected net profit for the final quarter of last year. Speaking to investors over a conference call, the company’s outgoing chief financial officer Pierre-Jean Sivignon placed the blame squarely on weakened consumer sentiment in mature markets (particularly Western Europe). The net profit of 465 million euros (around £400 million) that Philips posted was quite some way off the average forecast of 532 million euros (approximately £458 million) polled by Reuters among 20 analysts.

Looking forward, the Dutch firm will shift its focus from developed markets (such as Western Europe and the USA where HDTV sales have slowed) to emerging markets like Brazil, Asia and Russia where there is more scope for growth. To help with this, the company is appointing two head executives who are experienced in business expansion in Asian regions: Frans van Houten as chief executive officer (CEO); and Ron Wirahadiraksa as chief financial officer.

On Wednesday, South Korean conglomerate LG Electronics reported a net loss for the previous quarter, the company’s first in seven quarters. For the three months to 31 December 2010, a loss of 256.4 billion Korean won (about £144 million) was posted, which contrasted sharply with the net profit of 361.9 billion Korean won (around £204 million) during the same period a year ago. Again, poor demand for flat-panel HDTVs in the weak yet severely competitive European markets was cited as one of the reasons for the wobbly performance.

LG and Philips were involved in a couple of joint ventures: LG-Philips Display which mainly dealt with CRTs; and LG-Philips LCD which manufactured active-matrix liquid crystal display (AMLCD) panels. In 2008, Philips sold all its shares in LG-Philips LCD to the South Korean company, who subsequently renamed the operation to LG Display.