LG Display recorded an operating loss of 116 billion won in the second quarter, slightly below market expectations. The decline in demand for organic light-emitting diodes (OLEDs) during the seasonal off-peak period, combined with the continuing appreciation of the won against the dollar, negatively impacted its revenue. LG Display plans to focus on supplying OLEDs for the new products of its major client, Apple, in the second half of the year to speed up its annual return to profitability.
On the 24th, LG Display announced that it recorded an operating loss of 116 billion won on a consolidated basis for the second quarter. This represented an increased deficit compared to the same period last year (operating loss of 93.7 billion won). The results also fell short of the securities industry's initial consensus forecast (operating loss of 102 billion won). Revenue was 5.587 trillion won, a decrease of 16.7% from the same period last year (6.7082 trillion won) and down 7.9% from the previous quarter (6.0653 trillion won).
A representative from LG Display noted, "It is a traditional off-peak season with reduced demand ahead of the new product launches in the second half, leading to a decline in mobile shipment volumes compared to the previous quarter," and added, "The ending of the LCD TV business under the strategy to enhance the OLED-centric business structure and the drop in the won-dollar exchange rate also impacted the results."
LG Display explained that the proportion of OLED products in total revenue increased by 4 percentage points to 56% compared to the same period last year, and the company is expanding its business performance based on strengthened OLED technology competitiveness. It emphasized its focus on continuing cost innovation and operational efficiency to solidify its foundation.
The small and medium business unit plans to enhance its competitiveness in the high-end market based on its technical leadership, such as durable, high-brightness, low-power tandem OLED technology, and stable supply capabilities for smartphone panels.
The large business unit intends to strengthen its stake in the premium market with various OLED panel lineups, including OLED TVs that apply its proprietary technology, 'primary RGB tandem,' and gaming monitors that achieved a triple crown for the highest brightness, refresh rate, and response speed.
The automotive business unit plans to generate demand based on innovative technology and product competitiveness capable of implementing ultra-large, high-definition, reliability and durability, low power consumption, and various form factors.
Kim Sung-hyun, the Chief Financial Officer of LG Display, said, "In the second half, we expect a steep rebound in performance across the entire OLED business segment. We will continue to pursue cost innovation and operational efficiency to strengthen a stable revenue structure," and added, "As the early repayment of lending and reduction of borrowing funds are progressing more quickly than initially planned, we expect to show meaningful results in both performance and financial structure this year."
There are prospects for an acceleration in performance improvement as OLED panel supply will increase starting this second half of the year. Kim Sun-woo, a researcher at MERITZ Securities, noted, "We understand that we will supply 3 out of 4 flagship smartphones from major clients in the second half, and shipments of P-OLED are expected to increase significantly starting in July," adding, "Additionally, TV OLED is reporting a profit this quarter, and with increased domestic customer volumes in the second half, further performance improvements are anticipated."
Analysts suggest that this enhancement in revenue could lead to a successful annual return to profitability. Jeong Won-seok, a researcher at iM Securities, stated, "It is anticipated that we will achieve our first annual profit since we began the OLED TV panel business in 2013. Moreover, the expansion of LG Display's models utilizing P-OLED panels from 2 to 3 this year is also a positive sign," and it is expected that this will lead to estimated revenues and operating profits of 25.2 trillion won and 652 billion won, respectively.