LG Display's Earnings Tipped to Improve After Q2 | Be Korea-savvy

LG Display’s Earnings Tipped to Improve After Q2

This image, provided by LG Display Co., shows the company's OLED display products.

This image, provided by LG Display Co., shows the company’s OLED display products.

SEOUL, July 2 (Korea Bizwire)LG Display Co., South Korea’s major display panel maker, is likely to report a wider loss in the second quarter of the year due to a slump in smartphone and TV demand on the pandemic, analysts here said Thursday, although it is expected to make a rebound in the current quarter.

LG Display, the world’s leading supplier of large OLED display panels, was expected to log 4.9 trillion won (US$4 billion) in sales in the April-June period, down 8.1 percent from a year earlier, while its operating loss was projected to widen from 368.7 billion won to 401.7 billion won over the period, according to the data from nine brokerage houses compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency.

The estimate suggests the company will suffer an operating loss for six consecutive quarters.

Analysts said a plunge in global smartphone and TV demand dented the company’s OLED display business amid the pandemic, with its factories suffering a slowdown in production.

“In the second quarter, the utilization rate of the company’s OLED plant in Paju, South Korea, dropped from the first quarter due to a decline in demand,” said Kim Jung-hwan, an analyst at Korea Investment & Securities.

“Costs also increased due to a production delay at its OLED factory in Guangzhou, China.”

LG Display’s LCD business, which still accounts for a majority of its revenue, may have benefited from increased sales of display panels for computers and notebooks due to the pandemic-driven work-at-home economy.

But analysts said overall performance of LG Display’s LCD business may not be as impressive as TV panel prices have dropped.

“The average price of LCD TV panels in the second quarter was estimated to fall 4 percent from the first quarter, making it harder for the company to improve its business,” Kim added.

LG Display Co.'s OLED factory in Guangzhou, China. (image: LG Display)

LG Display Co.’s OLED factory in Guangzhou, China. (image: LG Display)

Analysts, however, expected LG Display to narrow its operating losses in the second half of the year, with some even predicting the company to shift to the black.

LG Display is likely to improve its earnings as demand for smartphones and TVs should recover in the second half as major markets reopen their economies, analysts said.

“A price hike is expected in LCD TV panels, while the supply of OLED sheets will improve as its Guangzhou factory ramps up production,” said Kim Un-ho, an analyst at IBK Investment & Securities.

Apple Inc.’s upcoming iPhone 12 smartphone will also help LG Display improve its earnings, analysts said, as the company supplies its plastic OLED panels to the American tech titan.

“Its OLED business will help the company’s turnaround in the second half,” said Ko Jung-woo, an analyst at NH Investment & Securities.

“Its small and midsize OLED panel shipments are expected to reach 35.8 million units in the second half, up 136 percent from the previous six months.”

LG Display has been trying to minimize its reliance on LCD products in recent years due to a supply glut in the sector prompted by Chinese firms.

The company previously announced it plans to halt LCD TV screen production in South Korea after this year.


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