LG Display Achieves Profit Turnaround After 7 Quarters Amid Panel Market Improvement (Update)

LG Display Guangzhou Factory, China

[Asia Economy Reporter Changhwan Lee] LG Display announced on the 22nd that it recorded sales of 6.7376 trillion KRW and an operating profit of 164.4 billion KRW in the third quarter of 2020.

Sales increased by 27% compared to the previous quarter, driven by the continued expansion of IT product shipments due to the establishment of remote work and online classes after COVID-19, expanded supply of new products to strategic customers in the mobile sector, strong global TV sales, and the full-scale mass production of the new OLED (organic light-emitting diode) plant in Guangzhou, China.

Operating profit reached 164.4 billion KRW, achieving a return to profitability for the first time in seven quarters due to balanced performance improvements across all business divisions.

By business division, the IT sector, which has differentiated competitiveness and proactively responded to environmental changes, continued to expand shipments. In mobile POLED (plastic OLED), production of new products for strategic customers also expanded, resulting in meaningful profit improvement.

In the TV division, the full-scale mass production at the Guangzhou OLED new plant and flexible responses to improved supply conditions of large LCD (liquid crystal display) panels are believed to have significantly reduced the deficit. The sales composition by division showed IT panels at 43%, the highest following the second quarter; TV sales increased by 5% from the previous quarter to 28%; and mobile and other sales increased by 4% to 29%.

Key financial indicators for the third quarter were a debt ratio of 192%, a current ratio of 97%, and a net debt ratio of 90%. Borrowings, which had continuously increased since the large-scale facility investments in 2017, decreased by 310 billion KRW for the first time in the third quarter. LG Display plans to continue proactive financial management activities based on scenarios assuming the worst-case situation to respond to the increasingly uncertain and volatile business environment.

Meanwhile, LG Display recognizes that the non-face-to-face/home entertainment culture is emerging as a new lifestyle and an opportunity factor, but at the same time, external environmental volatility remains high. The company plans to focus on enhancing market response flexibility going forward.

Large OLED, as the only display that can simultaneously satisfy customers’ diverse needs such as overwhelming high image quality, design flexibility, and eye health, will continue to expand its market leadership based on these strengths. With a stable supply base secured through the full-scale shipment from the Guangzhou new plant, the company aims to double shipments in the second half of this year compared to the first half and lead growth to around 7 to 8 million units next year.

In the LCD sector, while maintaining the basic direction of structural innovation to “make the strong stronger,” some domestic LCD TV production lines will be additionally converted to IT use to strengthen preemptive preparation for quick response to market opportunities. Additionally, domestic LCD TV panel production will be flexibly managed within the scope of existing facilities and available workforce according to customer needs and short-term supply and demand conditions.

POLED will focus its capabilities on stable business operations by minimizing off-season volatility based on stable product quality, yield, and strengthened relationships with strategic customers.

Seodonghee, LG Display CFO (Chief Financial Officer), stated, “Due to recent changes in lifestyle caused by COVID-19, TVs are evolving into products that can be used not only for video viewing but also for gaming, remote work, and home training.” He added, “We will further strive to expand OLED’s market leadership as a display optimized for customers’ usage environments and needs and flexibly responsive to new form factors.”

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