Still in the Black

LG Display’s models show a variety of OLED devices.
LG Display’s models show a variety of OLED devices.

 

LG Display Co., South Korea's major flat panel maker, managed to stay in the black in the first quarter amid earlier outlook of an expected shortfall due to the decrease in panel prices. This was largely due to the company’s profit-centered panel product strategy, intensive cost reduction programs and favorable exchange rates. 

LG Display plans to shift its focus of new investment and production lines from liquid-crystal display (LCD) to high value added organic light-emitting diode (OLED) in the long term.

The company announced its earnings in the first quarter on Apr. 23 that it recorded 5.99 trillion won (US$5.21 billion) in sales and 39.5 billion won (US$34.38 million) in operating profits. It marked the 16th consecutive quarter for the company to post an operating profit since the second quarter in 2012. However, its sales and operating income in the first quarter dropped 20.1 percent (1.51 trillion won or US$1.31 billion) and 34.8 percent (21.1 billion won or US$18.36 million), respectively, from the previous quarter. In particular, its operating profits plunged a whopping 704 billion won (US$612.71 million) from a year earlier. The figures in the first quarter itself look gloomy but market watchers and LG Display think that the company put up a good show.

This is because they earlier expected LG Display may show some 100 billion won (US$87.03 million) of losses in the first quarter as the price of LCD panels decreased more than 30 percent from the fourth quarter last year and TV makers carried out the intensive inventory adjustment.

The company’s investment will be concentrated on OLEDs in the long run. LG Display Chief Financial Officer Kim Sang-don said, “The company will invest 4 trillion to 5 trillion won (US$3.48 to 4.35 billion) in facilities as it said earlier. However, it is time to make proper investment plans as OLEDs now have expanded to TV, mobile device, car and lighting businesses, beyond mass production.

The production lines will be gradually transferred from LCD to OLED. Kim said, “With the increase in demand from clients, we have started running additional production lines in the second half of last year and boosted OLED panel manufacturing capacity to 34,000 units per month. We will be able to produce 60,000 eighth-generation OLED panels per month after the second quarter of next year, continuously expanding the investment. In the mobile device sector, we will also convert the current main low temperature polycrystalline silicon (LTPS) LCD panel lines to plastic OLED panel lines by stages.

An official from the industry said, “As Apple will use OLED panels in new iPhone models next year for the first time, LG Display is forced to change its small and mid-size panel strategy to OLED-centered strategy in haste” 

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