Huge Investment in OLED
Despite seasonal off-season and exchange rate fluctuation, LG Display has recorded an operating surplus for 21 quarters in a row based on differentiated product strategy
The company announced on July 25 that it posed 6.63 trillion won (US$5.93 billion) in sales and 804.3 billion won (US$720.05 million) in operating profits in the second quarter based on the Korean International Financial Reporting Standards (K-IFRS).
LG Display said that the latest results can be attributed to the decrease in small and mid-size panel shipments due to seasonal reasons and the stronger Korean won. The sales in the second quarter dropped 6 percent from 7.06 trillion won (US$6.32 billion) at the previous quarter but rose 13 percent from 5.86 trillion won (US$5.24 billion) a year ago.
With the decrease in sales, its operation profits declined 22 percent from the previous quarter. However, the figures showed a whopping 1,712 percent growth compared to the same period a year earlier as the company expanded the portion of differentiated products, such as extra-large screen UHD TV and high-resolution IT devices, and saw a continuous growth in its new businesses, including auto and commercial sectors.
The net profits amounted to 736.7 billion won (US$659.53 million), up 8 percent from 679.5 billion won (US$608.33 million) at the previous quarter, while the earnings before interest, taxes, depreciation and amortization, or EBITDA, reached 1.58 trillion won (US$1.42 billion), showing a profit rate of 23.9 percent.
By product, television panels accounted for 46 percent of the total sales, followed by mobile panels with 22 percent, monitor panels with 17 percent and laptop and tablet panels with 15 percent.
For major financial indicators, LG Display maintained a stable financial structure with a debt ratio of 82 percent, liquidity ratio of 147 percent and net debt equity ratio of 17 percent.
Meanwhile, LG Display will invest a total of 17 trillion won (US$15.22 billion) mainly in large organic light-emitting diode (OLED) and small and mid-sized plastic OLED (POLED) panels by 2020. Out of 17 trillion won (US$15.22 billion), 15 trillion won (US$13.43 billion) will be invested in the domestic industry. The company will set up 10.5th-generation large OLED and 6th-generation POLED production lines at the P10 plant in Paju, the world’s largest display plant. It is part of its plan to make Paju as the global OLED hub and keep ahead of Chinese competitors by making large investments in OLED, which has a high growth potential.
LG Display confirmed the OLED investment plan at the board meeting on the 25th. Accordingly, the company will invest 5 trillion won (US$4.48 billion) in 10.5th-generation large OLEDs, such as facilities and existing investments, and 10 trillion won (US$8.95 billion) in small and mid-sized POLEDs, including the E5 and E6 lines. In addition, the company has decided to establish a joint venture to build its new 8.5th-generation OLED line in Guangzhou with a capital of 2.6 trillion won (US$2.33 billion), including 1.8 trillion won (US$1.61 billlion) from LG Display. LG Display estimates that the large investment will create a production inducement effect worth 56 trillion won (US$50.13 billion) and 210,000 jobs.