July 25, 2012 / 7:52 AM / 5 years ago

UPDATE 1-AU Optronics sees worst of times as losses continue

(Recasts, adds company and analyst comment)

* Q2 net loss T$12.46 bln vs consensus T$8.55 bln loss

* Debt crisis saps demand for LCD TVs in Europe

* AU shares down 27 pct this year in mostly flat market

By Clare Jim

TAIPEI, July 25 (Reuters) - Taiwan’s AU Optronics Corp warned of the worst-ever times for the flat-panel industry as the world’s No.4 LCD maker’s losses extended into a seventh straight quarter, battered by falling prices and weak demand.

Strapped consumers in major economies, especially Europe, are cutting back on big-ticket items such as flat-screen TVs. The overall global TV market is expected to shrink by 1.4 percent this year.

South Korea’s Samsung Electronics has already warned of how Europe’s debt crisis is denting demand in its biggest TV market, while panel maker LG Display is expected to report its seventh-consecutive quarterly loss on Thursday.

“It’s now the most difficult time for the panel industry,” AU President Paul Peng told an investor conference on Wednesday. “In the past it has been affected by the business cycle, but it’s never been so bad.”

AU, which supplies major brands such as Hewlett-Packard, Dell Inc and Sony Corp , posted a net loss of T$12.46 billion ($413.85 million) for April-June. That was worse than the median forecast for a net loss of T$8.55 billion in a Reuters poll of 16 analysts.

AU reported a net loss of T$10.8 billion in the same period a year earlier and a net loss of T$13.8 billion in the previous quarter.

Earlier on Wednesday, South Korea’s LG Electronics Inc , the world’s No.2 TV maker, said quarterly profit more than doubled on a jump in TV sales, but is set to face some challenging months ahead as the euro zone crisis saps demand in Europe, a region it is heavily exposed to.

Barclays Capital analyst Jamie Yeh said that as the outlook for TV and notebook PC demand is not as upbeat as in the first quarter, the speed of recovery in the LCD panel industry is slowing and AU may not see a profit until the first half of next year.

That compares with original market expectations of the second half of this year.

“The industry will still improve in principle, but utilisation rates and capacity expansion rates have been quite disappointing,” Yeh said.

AU’s Peng said the company still expected a high season in the second half, “though it won’t be as high compared to the past.” Most electronics makers see sales rise in the second half with the traditional back-to-school and year-end holiday buying seasons.

AU said it expected average selling prices for large panels to rise by the low single digits in the third quarter over the second, while shipments would be flat.

It will maintain its planned capital expenditure for this year at T$40 billion.

Before the results, AU shares closed down 1.86 percent in a broader market that fell 0.42 percent. The stock has lost about 27 percent in the year to date, compared with a largely flat market. (Writing by Jonathan Standing; Editing by Chris Gallagher)

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