LGD Surpasses 700 Billion KRW Operating Profit in 4 Years... "Large OLED to Turn Profitable in Second Half"

[Asia Economy Reporters Heungsun Kim and Suyeon Woo] LG Display recorded an earnings surprise by surpassing an operating profit of 700 billion KRW in the second quarter of this year. Sales also reached the highest level ever recorded for the second quarter.

Thanks to the rise in liquid crystal display (LCD) prices and an increase in shipments of organic light-emitting diode (OLED) TV panels, which are exclusively produced worldwide, LG Display achieved its best first-half performance in four years since 2017. The company expects further performance improvements in the second half of the year due to the seasonal peak and increased shipments of OLED TV panels.

Highest Ever Second Quarter Sales... Operating Profit Surpasses Consensus in 'Earnings Surprise'

LG Display announced on the 28th that it recorded sales of 6.9656 trillion KRW and an operating profit of 701.1 billion KRW in the second quarter of this year. Sales increased by 31.3% compared to the same period last year, marking the highest ever for the second quarter, and operating profit turned positive compared to an operating loss of 517 billion KRW in the same period last year.

This is the first time in four years since the second quarter of 2017 (804.3 billion KRW) that LG Display’s operating profit has exceeded 700 billion KRW. Previously, LG Display’s operating profit for the first quarter of this year was 523 billion KRW, bringing the total operating profit for the first half to 1.2241 trillion KRW. This is also the first time in four years that the first-half operating profit has surpassed 1 trillion KRW.

LG Display analyzed that "the expansion of sales in the TV segment, including OLED, and solid performance in IT led to overall profit improvement." By product, IT panels accounted for the largest share at 39%. The sales share of TV panels, which saw price increases and expanded shipments, rose by 7% from the first quarter to 38%. Mobile panels accounted for 23%.

The Power of OLED TV Panels... Large OLED Expected to Turn Profitable in the Second Half

Among these, the performance improvement of OLED TV panels, which LG Display is focusing on, stood out. Shipments in the first half reached 3.5 million units, already exceeding 80% of last year’s annual shipments. The company expects the large OLED business to turn profitable in the second half of this year. The company forecasts annual sales of 8 million units this year, 10 million units next year, and 11 million units the year after.

The LCD segment, which accounts for more than 15% of the company’s sales, is expected to see a decline in TV panel prices, but the company plans to maintain competitiveness by focusing on high value-added IT, extra-large TVs, and commercial products. While reducing LCD TV panel production to half of the previous maximum level, the company plans to improve profitability by shifting production mainly to IT devices.

The future growth engine, the POLED (plastic OLED) business, will simultaneously expand volume and prepare new models, while expanding the portfolio focused on high-profit products. During the earnings conference call, LG Display also announced that it is considering additional expansion investments for the POLED business.

Regarding capital expenditures, the company plans to maintain a policy of executing investments within the EBITDA (earnings before interest, taxes, depreciation, and amortization) range and improve its financial structure. This year, it will increase preemptive investments related to ESG (environment, social, and governance) such as safety and environment, while continuing a tightening policy on investments excluding strategic ones.

Meanwhile, LG Display expects shipment expansion across all business sectors including TV, IT, and mobile in the third quarter due to the seasonal peak. The company aims to ship just over 2 million OLED TV panels in the third quarter, and improved performance is expected in the IT sector compared to the second quarter. Mobile shipments are also expected to increase as customers ramp up production of new models.

Seodonghee, Executive Vice President and Chief Financial Officer (CFO) of LG Display, said, "The strong performance in the second quarter is not only due to favorable LCD market conditions but also the normalization of the OLED business. Although market volatility will continue, we will accelerate performance improvements in OLED while building a stable foundation for results in LCD through strategic collaboration with customers."