SEOUL, Oct. 27 (Korea Bizwire) — LG Display Co., South Korea’s major display panel maker, said Wednesday that its third-quarter net income surged 4,067.5 percent from a year earlier to 463.5 billion won (US$396.1 million), largely driven by strong demand and profitability of its OLED business.
Operating income jumped 221.8 percent to 528.9 billion won in the three months ending in September, 17.3 percent lower than previously expected. It was down 25 percent from the second quarter due to a “drop in LCD panel prices, and a rise in material costs and increased costs from new facility operations,” the company said in a statement.
Sales rose 7.2 percent on-year to 7.22 trillion won.
Continued growth in pandemic-led demand for consumer electronic devices helped boost the company’s top and bottom lines.
But declining LCD panel prices and intensifying competition with Chinese rivals dim the company’s outlook in the fourth quarter, analysts said.
Kim Chan-woo, a researcher at Shinhan Investment Corp., cited “sagging demand for LCD TV and steep price decline” as causes for concern over the company’s fourth-quarter performance.
“As LCD panel prices keep going down, the company is expected to speed up its portfolio restructuring efforts to put more focus on high-margin products,” he said in his latest report, adding that OLED products will help boost the company’s performance going forward.
LG Display has said it will strengthen its OLED and POLED businesses to offset declines in LCD revenue and further boost profit.
The display maker projected OLED TV sales to reach 8 million units this year, and said it will pump up production, with its plant in Guangzhou, China, expanding capacity.
LG Display is the world’s sole supplier of large-size OLED panels for TVs, but it showed relatively weak competitiveness in the medium-and-small sized OLED sector.
In August, the company said it will invest 3.3 trillion won in the sector to boost its production capacity.
“Although volatility in the LCD market keeps growing, the company has continued to make preemptive preparations and strengthen stability by focusing on competitiveness through LCD business innovation,” Chief Financial Officer Suh Dong-hee said during the earnings call.
He expected shipments of large OLED panels in the fourth quarter to increase by mid-10 percent compared with the third quarter thanks to the company’s “stronger positioning in the high-end TV market.”
“The mainstream market is contracting in the second half, but the high-end keeps growing, creating a wider gap in the market. This is due to the consumers’ willingness to pay more for higher specifications,” he said, adding TV will become “a multi-use device with more time spent and higher quality content.”
The company’s shares fell 0.27 percent to close at 18,500 won, compared with the broader KOSPI’s 0.77 percent loss.