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Germany's Merck sees liquid crystals momentum slowing in second half

By Ludwig Burger

DARMSTADT, Germany (Reuters) - Demand for 3D screens and bigger televisions resulted in good growth for Merck KGaA's liquid crystals business in the second quarter, although that rate will slow as its Asian customers reduce inventories, the company said.

"We expect to see a destocking situation in the second half so that the momentum we've had in the first half will level off," finance chief Matthias Zachert told a press briefing at the group's headquarters in Darmstadt, Germany. "Customers are reducing their inventories."

He added that business at the unit, the world's largest supplier of liquid crystals for television, computer and smartphone displays, had been "very good" in the second quarter, giving it a market share of more than 60 percent.

Merck shares were up 2.1 percent at 117.40 euros by 0843 GMT (4.43 a.m. ET), outperforming a 1.3 percent gain in Germany's blue-chip DAX index.

Consumer appetite for 3D televisions and for larger screens was giving Merck a boost, Zackert said. "We are happy about the trend towards 3D because it speeds up the TV replacement cycle and we have an all but monopolistic position in this market segment."

Production of TV displays of 110 inches or more in the United States is also a boon for Merck, which offers display chemicals particularly tailored for oversized screens.

Yet global demand for TVs is expected to plateau this year, as many consumers in developed countries already own a flat-screen TV.

First-quarter results at liquid-crystal display (LCD) makers have been mixed. Taiwan's AU Optronics Corp, the world's No.4 LCD maker, in April posted a smaller-than-expected quarterly loss as panel shipments for tablet PCs and high-definition TVs increased.

LG Electronics Inc, the world's No.2 TV maker, in April said quarterly profit fell 13 percent amid sharp price cuts.

In liquid crystals, Merck competes with Japanese companies JNC Corp, also known as Chisso, and DIC Corp, previously called Dainippon.

(Editing by David Holmes)

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