LG Electronics said Tuesday it would retain its loss-making plasma display panel business, in spite of speculation over a restructuring of the division.

The pledge is the first time the company has made about the division since the business posted an operating loss of Won262bn ($280m) in the last quarter, with PDPs losing ground to liquid crystal displays in the competitive 40-inch flat panel market.

Nam Yong, chief executive of LG, said it would not change its display strategy, predicting that demand for PDPs would grow in the 50-inch TV market.

“PDPs seem to have lost their competitiveness to LCDs in the market below 40-inch. But they are still competitive in the 50-inch market and demand will continue to grow in the segment,” he said.

However, he added that LG would not make additional investment to expand its PDP capacity until the end of the first half of next year as LG’s current capacity was enough to cover demand.

LG reported a net loss of Won122.6bn in the first quarter as the poor performance of its display business offset an improvement in handsets.

James Jeong, chief financial officer, said LG’s earnings in the second quarter would improve, as he expected the PDP business to break even either late in the second quarter or early in the third quarter.

LG also said Tuesday it would retain its 37.9 per cent stake in LG Philips LCD, the world’s second-largest flat-screen maker, even after a lock-up period for a stake sale ends in July.

The joint venture with Philips, the Dutch group, has been hit by four consecutive quarterly losses due to weaker panel prices amid an industry-wide oversupply.

However, the company said it would break even in the current quarter as falling LCD TV prices would increase demand.

Philips had said it would divest its 32.9 per cent stake in the venture but Nam Yong, chief executive of LG, said the Dutch company was not likely sell the entire stake in one tranche, given the recent stock price rise in LG Philips.