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LGD Still Exposed to Slow OLED Panel Growth
They also outlooked Q420 Revenue increased by 16% Y/Y to KRW6,738B or roughly $5.93B. LG reported its first operating profit of KRW164B or $144.3M after seven quarters. It suffered a loss of KRW436B or $384.7M a year ago. After six quarters in negative territory, LG wound up with a net profit of KRW11B or $9.6M.
Table 1: Selected Financial Data from LGD’s Q320 Earning’s Report
They also outlooked Q420 Revenue increased by 16% Y/Y to KRW6,738B or roughly $5.93B. LG reported its first operating profit of KRW164B or $144.3M after seven quarters. It suffered a loss of KRW436B or $384.7M a year ago. After six quarters in negative territory, LG wound up with a net profit of KRW11B or $9.6M.
Table 1: Selected Financial Data from LGD’s Q320 Earning’s Report
Source: LG Display
Demand for display panels rose in Q3. After steadily declining in previous quarters, shipments of display panels reversed course to increase by 23.9% Q/Q to 8.3M square meters. Average selling prices increased as well by 7.9% Q/Q to $706 per square meter. LG had been shutting down capacity for some time, but capacity rose again in Q3 to 10.8M square meters. The start of production at the new OLED factory in China has helped the increase in shipments, ASPs and capacity.
Table 2: LGD Panel Capacity, Shipments and AS
Table 2: LGD Panel Capacity, Shipments and AS
Source: LG Display
After finishing the last quarter of 2018 with a profit, LG spent the next six quarters in negative territory. The turnaround is even more striking in comparison to Q2. LG managed to get out of the red fairly quickly, It's clear there must have been a major change to drive the numbers as reported in the table below.
Table 3: LGD – Revenue Operating Income EBITA, Net Income
Source: LG Display
LG started to see some progress in Q2 which it expected to carry forward to Q3. The company had forecast Q3 would be better than Q2. The outlook called for LG to trend upwards, although there may be some ups and downs along the way. LG credited its ability to ship more display panels to increased demand for:
The competition is trying to narrow the gap while retaining LCD's price advantage. There's somewhat of a race between OLED and LCD but OLEDs are expected to have the upper hand at least until there is a breakthrough in the transport of µLEDs, which is not expected until the mid ‘20s. LG extended their withdrawal date from LCD TV panels to the end of 2021. The biggest concern for LGD is that the increase in Q320 revenue and profits was a function of the rising demand for large LCD panel coupled with the rising ASPs. There were reports that even with the increased OLED shipments that segment was just breakeven.
- IT LCD products due to work-from-home and online schooling,
- iPhone 12 OLED panels
- TVs enabled by mass production of OLED TV panels at the new factory in China
- A recent increase in demand for LCD TV panels
- The possible return of overproduction in LCD TV panels leading to falling prices. Q3 saw an increase in prices for display panels and suppliers are not only trying to increase their production volume but shifting to TV production.
- Higher performing LCDs using Mini LEDs and Dual cell solutions. LG is counting on OLED TVs in particular to drive earnings going forward. Samsung will start mass production of QD-OLEDs in 2021 and TCL is expected to have an IJP OLED fab in 2023.
The competition is trying to narrow the gap while retaining LCD's price advantage. There's somewhat of a race between OLED and LCD but OLEDs are expected to have the upper hand at least until there is a breakthrough in the transport of µLEDs, which is not expected until the mid ‘20s. LG extended their withdrawal date from LCD TV panels to the end of 2021. The biggest concern for LGD is that the increase in Q320 revenue and profits was a function of the rising demand for large LCD panel coupled with the rising ASPs. There were reports that even with the increased OLED shipments that segment was just breakeven.