LG Display's OLED TV Panels Finally Turn a Profit

Mike Wheatley

LG Display Co. had reason to be cheerful this week after posting solid third-quarter financial numbers that beat analysts’ estimates and pushed it back into profit.


The South Korean company, which is the world’s largest manufacturer of TV displays, broke a streak of two successive losing quarters thanks to robust sales of its high-margin organic light-emitting diode panels, it said. It also benefited from an uptick in prices for its liquid crystal display panels, which represent the bulk of its business.

LG Display posted an operating profit of 140.1 billion won (£96.3 million) for the quarter ending in September, well up from the 228.1 billion won loss it reported in Q2, but still down 76 percent from a year ago.

Sales were also down from one year ago but still up 8.75 percent compared to the previous quarter, hitting 6.1 trillion won in total. The company added that its net profit totaled 17.5 billion won for the quarter.

The company benefited to some extent from a trio of factors beyond its control, including a rebound in LCD display prices, an uptick in sales of its OLED panels, and a weaker Korean won that boosted overseas sales.

Earlier this year LG recorded its first quarterly loss in more than six years due to a decline in the price of LCD displays. Prices had fallen sharply due to oversupply as a result of increased production capacity from its rivals in China, and although the market has rebounded somewhat, analysts say the resurgence is likely to be short-lived.

In its most recent report on LCD display panel shipments, IHS Markit warned that prices are likely to fall again due to an expansion from LG’s Chinese rivals. These include BOE Technology Group Co., which has already displaced the Korean firm at the top of the LCD panel market in terms of numbers of units shipped.

The same fears were echoed by LG’s chief financial officer Kim Sang-don during a call shortly after the company posted its third quarter results. Speaking to analysts, he said the price momentum seen in the last quarter was unlikely to be sustained.

“Panel area shipments in the fourth quarter are expected to increase by a low to mid-single digit percentage due to the seasonality effect,” Mr. Sang-don said. “Panel price trends are expected to vary by product size and segment.”

Hedging its bets against these anticipated headwinds, LG Display says it intends to sharpen its focus on the more profitable OLED panels used in premium TV models. The company shipped some 1.7 million OLED units in 2017, and the recent quarter saw the unit post its first profit after more than five years in the business.

“2018 and 2019 are critical years for LG Display as it transforms into a more OLED-focused business structure,” Sang-don said. “We will do our best to maximise profitability by expanding our OLED business portfolio while accelerating our pursuit of a differentiated strategy for our LCD business.”