LG Display profit slumps on falling panel prices

SEOUL — South Korea’s LG Display Co. Ltd., the world’s biggest maker of LCD panels for TVs, said its fourth- quarter operating profit plunged 95% from a year earlier, hurt by falling panel prices and investment in its organic light-emitting diode (OLED) business.

The Apple supplier’s result, also hit by an unfavorable exchange rate, was its weakest in nearly two years and came in well below market expectations as it continues to expand its OLED division.

“Although short-term earnings might be impacted by liquid crystal display ( LCD) panel prices, the share price will be driven by the firm’s progress in the OLED business,” said Park Sung-soon, analyst at Baro Investment & Securities.

The Apple supplier’s operating profit for October-December came in at 44 billion won ($41.20 million), much lower than an average 250 billion won forecast drawn from 12 analysts polled by Thomson Reuters I/B/E/S.

It was LG Display’s lowest quarterly operating profit since April-June 2016.

“The downward trend in panel prices is anticipated to continue, but prices are expected to stabilize at the end of the first quarter,” Chief Financial Officer Don Kim said in a statement.

Panel shipments during the first quarter were expected to fall by a high-single digit percentage due to off-season, lower demand, he added.

Prices of LCD TV panel prices fell 20% to 40% last year after previous price rises constrained demand for large- size TV sets, said WitsView, part of research provider TrendForce.

However, WitsView said price drops are expected to ease in 2018 as TV shipments rebound and lower panel prices spur TV makers to stock up on inventory. Also, supply-and-demand is seen more balanced as new lines from companies such as China’s BOE Technology Group are still ramping up production quality.

LG Display leads the industry in OLED panels for TVs but rival Samsung Electronics’s display business dominates the industry for small OLED panels used in mobile phones — a market that LG is trying to penetrate.

In December, South Korea approved LG Display’s plan to build an OLED panel production facility in China, as the firm works to grow its OLED business.

WitsView forecast that LG Display will be able to ship smartphone OLED panels to Apple around the end of the third quarter.

South Korean exporters will be keeping a close eye on the won in 2018. The currency traded on Monday at 1,070.1 won per dollar, near a threeyear high. —