LG Display Aims for Profitability After 7 Quarters of Losses

P-OLED Boom and Continued Strength in LCD Prices

[Asia Economy Reporter Eunmo Koo] LG Display is expected to turn profitable in the third quarter after six consecutive quarters of operating losses. The stock price has also strongly rebounded this month, reflecting such expectations.

According to the Korea Exchange on the 26th, LG Display's stock price closed at 15,150 won, up 0.33% (50 won) from the previous trading day. LG Display's stock price rose 13.1% on the 24th and has increased by 20.2% this month. This figure is nearly four times higher than the KOSPI return of 5.2% during the same period.

The recent rise in LG Display's stock price is interpreted as being influenced by expectations that the operating losses, which continued for six consecutive quarters until the second quarter of this year, could turn into profits in the third quarter. LG Display's operating profit, which was 2.4616 trillion won in 2017, shrank to a profit of 92.9 billion won in 2018 due to the low-price offensive of Chinese companies' LCDs, then bowed its head with an operating loss of 1.3594 trillion won last year. This year, it recorded a loss of 878.9 billion won in the first half.

However, signs of change are emerging as the next-generation main products, plastic organic light-emitting diode (P-OLED), as well as the organic light-emitting diode (OLED) TV business, are showing signs of normalization. Sungryul Kwon, a researcher at DB Financial Investment, forecasted, "In the P-OLED business, which recorded large-scale losses, the volume from overseas strategic customers is increasing, raising the operating rate and significantly reducing the deficit. Also, as the quarter-end approaches, the Guangzhou plant will be operating at full capacity with 60,000 units, cutting related losses by more than half in the large OLED segment."

Another positive factor for profit improvement is that the price of liquid crystal display (LCD) panels, the existing main product, has been on the rise since June. According to market research firm WitsView, the price of LCD TV panels in the second half of August rose 12.2% compared to the same period last month, continuing its strong trend. Dongwon Kim, a researcher at KB Securities, said, "As time spent at home increases, new demand for home entertainment has emerged, and the price decline of large 55-75 inch TVs is driving real demand growth," adding, "The strong price trend of LCD panels is expected to continue through September and October."

It is analyzed that the lifestyle changes brought about by the novel coronavirus disease (COVID-19) are creating a favorable operating environment for LG Display. With outdoor activities restricted, consumption of various content has increased, expanding demand not only for TVs but also for IT devices. Hyunsoo Kim, a researcher at Hana Financial Investment, predicted, "The IT panel market, represented by laptops, tablets, and monitors, is growing the fastest, and considering the increase in demand for remote work and online education, this trend is expected to continue."

This content was produced with the assistance of AI translation services.