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LG Display Shows Small Profit in OLEDs and Overall in Q318
October 29, 2018
 
LG Display (LPL) reported 3Q results of 6.103t won ($5.387b US), and operating profit of 140.1b won ($123.7m US), which was the first operating profit for the company after two quarters of losses.  Net profit was 17.5b won ($15.45m US), which was down over 96% y/y but up from the previous two quarterly losses.  
 

• Data
  • Capacity -Reported 13.4m m2 - Flat y/y up 3.8% q/q         
  • ASP - Reported $500/m2 - Down 16.7% y/y - ~flat q/q     
  • Shipments – up 5% in area                                                           
  • Mix – TV 41% - Monitors 18% NB/Tab 20% Mobile 21% Similar to the previous two quarters
  • Cash Flow – Net out 359b won ($316.9m US)                                      
  • FX – Positive 4%

 

• 3Q Comment
  • 3Q had favorable conditions (shipments up, ASP up, currency favorable), but ‘temporary’ –LCD business to vary from overall display industry -- competition from Chinese LCDs is increasing 
  • Expansion of high value LCD products and profitability
  • OLED TV finally contributed to overall profitability 
  • Shifting large panel LCD production toward commercial (public display) and high-end monitors (+gaming) to avoid new Chinese Gen 10+ capacity

 

• 4Q Guidance
  • Shipment area growth - +2.5%
  • Panel ASP – “rise is not expected to continue, but divergence by product” -- some panel price increases (their words) but the increases of the last quarter are likely over. (Could be for OLED TVs)
  • ASP (m2 basis) will be up 10-- parts supply issue in 3Q caused lower than normal small panel shipments (likely for iPhone XR, issue solved and the increased shipments of small panels will help ASP (m2 basis)
  • Supply/Demand – Supply growth greater than 10% - But as seen in 3Q panel prices can go up even when industry is in oversupply.  See other factors as having more influence on panel pricing, such as tariffs, news, access to capital

                                                                              

• LCD to OLED Fab Conversions
  • Fully planned by no scale or timing -- convert fully depreciated fabs away from generic LCD products – more high-end products and will convert some to OLED over the next two years.  Will expand OLED offerings to other products, likely notebooks and monitors

 

• Capex expect 16t won ($14.1b US) in 2018 & 2019

 

• Q&A
  • Currently getting ready for volume production at the OLED fab in Guangzhou and for the plastic OLED setup in Paju.
• OLED TV panels-- planning to invest in conversions to capture new clients and new customers.
• E-61 in Paju is expected to go into volume production in the fourth quarter of this year
• E-62, which is slated to go into volume production in the second half of next year
• 2018 overall depreciation amortization is about KRW1 trillion higher than in 2017
• Foldable OLED panels will take some time since the level of technology required for the foldable display is very high and they need the right circumstances to support this product. Meaning, the right kind of system as well as market demand. 
• OLED TVs will soon have very innovative products; CSO, Rollable and Transparent. 
• Focusing on the high end TV. So together those of the TVs for $1,500 to $2,000 range

 
They would not call out negotiations with Apple (AAPL) as a supplier of small panel flexible OLED displays, and they gave no indication of expected 4Q volumes.