The world's top liquid crystal display (LCD) maker had tipped both shipments and average selling price for LCDs to pick up sequentially during the third quarter, when analysts believed the company would benefit from a jump in orders as Apple readied the launch of its new larger-screen smartphones.

LG Display, which also counts sister company LG Electronics Inc as a major client, said LCD shipment volume for the third quarter rose from a year earlier though the average selling price for panels fell in annual terms.

For July-September, LG Display reported a 21.8 percent rise in operating profit to 474 billion won (279.8 million pounds). That compared with a 442 billion won mean estimate of 36 analysts polled by Thomson Reuters I/B/E/S and marked the strongest level since the fourth quarter of 2012. Revenue fell 0.5 percent on year to 6.5 trillion won.

"In the third quarter, panel prices showed an upward trend as a tight supply situation continued due to increased demand for large-size panels," LG Display Chief Financial Officer Don Kim said in a statement.

LG Display said it expects fourth-quarter profit to improve sequentially, forecasting mid single-digit percentage rate panel shipment growth from July-September. Average selling price for panels is likely to remain stable in October-December from the previous quarter, it said.

Researcher WitsView said that August's large-sized panel shipments grew 5.6 percent from the previous month thanks in part to robust TV panel demand and tipped for further growth in September, indicating favourable conditions for panel makers.

Analysts also said that global shipments of ultra-high definition televisions, a premium product with significantly higher picture quality and fatter profit margins, also remain robust, lending support to panel makers such as LG Display.

Market dynamics are expected to remain favourable for LG Display. Analysts said that supply remains tight for TVs partly because of stronger demand for larger-sized panels, which is reducing production supply for certain mid-sized panels.

Orders for Apple's iPhone 6 and iPhone 6 Plus are expected to ramp up further in the fourth quarter following the launch of the devices in China, the world's largest smartphone market.

Researcher NPD DisplaySearch tips fourth-quarter panel shipments for the two iPhone models to rise to 75 million from 41 million in the July-September quarter.

Shares of LG Display closed 2.9 percent higher before the earnings release, compared with a 1.1 percent rise in the benchmark Kospi share index.

(Reporting by Se Young Lee; Editing by Christopher Cushing)