LG Display has successfully returned to profitability in one quarter, driven by increased shipments of organic light-emitting diode (OLED) panels. However, the company's operating profit fell 42% compared to the same period last year due to a decline in the won-dollar exchange rate and rising semiconductor prices, known as 'chipflation.' While the transition to an OLED-centric business model is yielding results, profitability remains under pressure from external factors.
According to LG Display, its consolidated revenue for the third quarter reached 6.277 trillion won, with an operating profit of 250.6 billion won. Although revenue decreased by 10% year-on-year, it increased by 12% compared to the previous quarter. The operating profit rebounded from a loss of 107.7 billion won in the second quarter. However, it represents a 41.9% decline from the operating profit of 431 billion won in the third quarter of last year.
The improvement in performance was led by OLED panels, as the launch of new products by major smartphone manufacturers coincided with the peak sales season for TVs, resulting in increased shipments of mobile and large OLED panels. The company reduced shipments of relatively low-margin medium-sized liquid crystal display (LCD) products. Consequently, while overall revenue decreased compared to last year, the restructuring towards high-value products continued.
However, the recovery in profitability faced limitations. The decline in the won-dollar exchange rate reduced the won-denominated revenue from products traded in dollars, while rising memory semiconductor prices also burdened the finished goods market. As component costs increased for smartphone and PC manufacturers, downward pressure on display panel prices emerged.
In fact, the third-quarter results fell short of market expectations. Financial information provider FnGuide reported that securities firms had projected an operating profit of 270.6 billion won. Despite the increase in OLED shipments, external variables such as exchange rates and component prices constrained profitability improvements.
Nonetheless, the earnings before interest, taxes, depreciation, and amortization (EBITDA), which indicates cash generation capability, stood at 1.2144 trillion won, reflecting a profit margin of 19%. The net profit reached 755.6 billion won, significantly exceeding the operating profit. This improvement was attributed to gains from foreign exchange translation due to the decline in the end-of-period exchange rate, which is separate from the core business's profitability improvement.
LG Display plans to continue enhancing its OLED-centric business structure. In the small and medium-sized segment, it aims to expand the supply of high-end products for mobile devices, while IT panels will focus on high-value products to boost profitability. The strategy includes strengthening its position among major clients based on stable development and production capabilities.
In the large segment, the company will enhance its competitiveness in premium TV OLEDs while broadening its customer base with competitively priced products. In the monitor market, LG Display plans to expand its gaming OLED product line to capture demand shifting from LCD to OLED.
Additionally, the company is pursuing next-generation technology development. It is focusing on securing proprietary technologies, including the recently developed OLED patterning technology 'FLIPP,' to improve production efficiency and reduce costs, aiming to establish a structure that can generate stable profits despite external environmental changes.
Kim Sung-hyun, LG Display's Chief Financial Officer, stated, "In the third quarter, we focused on strengthening our business competitiveness and operational efficiency amid ongoing uncertainties in the external management environment, such as exchange rate and component price fluctuations. We will continue to enhance our differentiated technological competitiveness and pursue cost innovation to improve our responsiveness to external changes and further strengthen our stable profit generation foundation."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.