LG Display Shines With Return To Profit: What Are The Odds in 2024

LG Display Shines, led by CEO Jeong Cheol-dong, who stepped in as a relief pitcher, turned to profit in seven quarters. There is growing interest in whether LG Display will be able to maintain a surplus this year despite internal and external volatility.

LG Display Shines With Return To Profit

LG Display held a performance presentation for the fourth quarter of last year today (24th) and announced that it recorded sales of KRW 7.3959 trillion and operating profit of KRW 131.7 billion. As a result, the company turned a profit for the first time in seven quarters.

The reason behind the turnaround in the fourth quarter is the increase in OLED (organic light emitting diode) panels for mobile devices and sales of large OLEDs for TV and IT due to increased seasonal demand. This is due to the increase in TV sales in the second half of the year and the iPhone 15 series launched in September last year.

The sales share by product (based on sales) is 18% for TV panels, 31% for IT panels (monitors, laptop PCs, tablets, etc.), 44% for mobile panels and other products, and 7% for vehicle panels.

Big hands ‘Apple and Samsung’ influence sales volume

Although operating profit was slightly higher than market expectations of KRW 120.6 billion, the external environment is highly volatile for this performance to continue this year. In particular, since it is a parts company that is influenced by finished products, its performance this year is expected to depend on the sales volume of Apple in IT devices and Samsung Electronics in large OLED TVs.

LG Display said at the earnings conference, “In the case of IT, negative growth is expected due to continued macro uncertainty. However, the extent is expected to decrease.” Expectations in the tablet display market are rising as Apple is installing an OLED panel for the first time in the iPad Pro, which will be released in the second quarter of this year. However, uncertainty increased as Apple conservatively adjusted the initial quantity.

In fact, as Apple lowered its initial OLED panel volume from the previous estimate of 10 million units to 8 million units, there are speculations that the volume supplied by LG Display will decrease compared to the original.

At the same time, Apple’s sales are expected to decrease as Apple, which has been holding the throne in the Chinese market, loses first place to Xiaomi. According to investment bank Jefferies, iPhone sales in the Chinese market in the first week of this month decreased by about 30% compared to last year, and iPhone sales in China are expected to decline by double digits this year.

However, LG Display said, “Preparations for mass production of IT OLED are being prepared without a hitch,” and “We expect to begin mass production within this year and expand operations stably to advance our overall business structure.”

In the case of the large OLED panel sector, which initially had a high proportion, leadership is expected to be strengthened. In particular, expectations were raised as we further strengthened cooperation with OLED panels for Samsung Electronics’ large TVs, which we have been supplying since last year. LG Display said, “We expect demand for set panels to be positive as demand for TVs larger than 70 inches has recently increased.”

The fact that the size of the OLED market is not large is a variable for LG Display this year. According to market research firm Omdia, OLED TV shipments account for less than 3-4% of the entire global TV market. LG Display explained, “We are strategically establishing ourselves with global TV set customers,” and added, “Based on the current TV growth, we aim to increase TV OLED panel quantity by 20% this year.”

‘Reduce fat’ such as debt, investment, and labor costs

Of course, LG Display itself is continuing to ‘lean back’ to avoid deficit. LG Display has decided on a paid-in capital increase and the amount of funds to be raised is approximately KRW 1.432 trillion based on the primary issuance price. Of these, 394 billion won is planned to be used to repay debt to strengthen financial stability.

LG Display said, “There is currently no difficulty in raising the necessary funds from the financial market, but it is also clear that in order to become a better company, we must secure financial soundness and reduce the burden of financial costs.”

At the same time, LG Display planned to reduce facility investment by 45% from 3.6 trillion won last year to 2 trillion won this year. In addition, manpower costs are also expected to be reduced by introducing 5-group 3 shifts from 4-group 2 shifts for some production line workers at the Paju and Gumi plants.

In his New Year’s address, LG Display CEO Jeong Cheol-dong said, “Let’s secure financial soundness and accelerate turnaround through cost innovation and achieving business goals,” adding, “We will pursue high-intensity measures in yield, productivity, and material costs based on a thorough analysis of the competitive environment in all businesses.” “We need to promote cost innovation to increase business competitiveness,” he said.

See More:

MS Surpassed 3 Trillion Second After Apple

MS Market Capitalization Exceeds 3 Trillion: AI Cloud Soaring With Both Wings

Apple Big Defeat: A Tale of Innovation, Leadership, and the Changing Tides of Technology

Does it Meet Standards of Japaneseness: Miss Japan’s Lack Of Backbiting