LG Display saw its net income surge from just 11 billion won one year ago to 463.5 billion won (around $396.1 million) by the end of the third quarter thanks to strong demand for its OLED display panels.
The company, which is the largest display maker in South Korea, also reported an increase of 221.8% in its operating income to 528.9 billion won in the quarter, up from 164 billion won a year ago. However, that also represented a 25% drop from the previous quarter, which the company blamed on a drop in LCD panel prices and the rising costs of raw materials and new facility operations.
LG Display said its total sales rose 7..2% to 7.22 trillion won during the three-month period.
Ongoing demand for consumer devices linked to the coronavirus pandemic has once again helped LG Displays top and bottom lines. Still, the company warned that the continuing decline in LCD panel prices and intensifying competition with Chinese rivals could hurt its profitability in the fourth quarter of the year.
Shinhan Investment Corp. researcher Kim Chan-woo told Korea Bizwire he sees “sagging demand for LCD TVs” and “steep price declines” as risk factors over the next three months. He added that as LCD panel prices nosedive, LG Display will respond by speeding up its restructuring efforts to focus more on higher-margin OLED displays.
“OLED products will help boost the company’s performance going forward,” Kim said.
LG Display has been pushing its OLED technology for some time already, and has projected OLED TV sales to hit 8 million units this year. The company is planning to expand production capacity at its second factory in Guangzhou, China, following a 3.3 trillion won investment announced in August.
The OLED TV business is a big money spinner for LG Display as it is currently the world’s sole supplier of large-sized OLED display panels. However, the company saw weaknesses in the medium- and small-sized OLED display segment.
LG Display Senior Vice President and Chief Financial Officer Suh Dong-hee said on an earnings call that the company has continually made preemptive preparations to weather the storm of LCD price volatility, mainly by focusing on LCD business innovation.
Suh said the company’s investments in OLED are continuing to pay off too. He forecast a 10% rise in large OLED panel shipments in Q4 due to LG’s “stronger positioning in the high-end TV market.”
“The global TV market is actually showing signs of polarization due to the expansion of the high-end TV market, though it is seemingly getting smaller,” Suh added. “It is predicted that OLED TV sales will continue to grow with the rise of high-quality content and consequently consumers’ increasing willingness to spend more on high performance TVs.”
