Flat screen prices could be set to drop further

The firm, a joint venture between the South Korea's LG and Europe's Philips, said it earned 35bn won ($34m; �18m) in the three months to December 2004.

A year earlier, the same quarter had produced profits of 544bn won.

Soaring demand for the screens around the world has led to over-production, driving prices sharply lower.

LG Philips' main rival is market leader Samsung, also from South Korea.

Boom or bust?

LG Philips said prices were down by almost 20% in the final three months of last year, and predicted a further 10-20% fall during the first half of 2005.

"Supply has been rising led by competition among LCD makers, while demand is yet to recover," said Brian Park, analyst at Woori Securities in Seoul.

"We expect global supply to exceed demand by 20% in the first quarter and 28% in the second quarter, so LCD makers will have to cut operating rates down to below 80%... virtually a shutdown of plants."

Samsung, in contrast, sees prices reviving from April onwards, with a balance between supply and demand by mid-year.

And LG Philips at least managed to stay in the black, confounding predictions that it would report a loss of about 13bn won.

"The figures are a little better than our expectations... because shipments surged quarter on quarter," said Jeff Kim of Hyundai Securities.