South Korea’s LG Display declared the largest quarterly profit in over three years on Wednesday, returning to black for the second quarter in a row with the aid of expanded shipments of Apple’s latest iPhone models.
The Apple supplier had a net profit of KRW 685 billion (roughly Rs. 4,500 crores) in the fourth quarter of 2020 compared to a loss of KRW 422 billion (roughly Rs. 2,800 crores) in the same period a year ago.
It was the biggest quarterly profit of the display panel firm since the second quarter of 2017 and well ahead of industry forecasts for KRW 286 billion (roughly Rs. 1,900 crores) of profit, according to the Refinitiv SmartEstimate derived from 12 analyst estimates.
“As the global work-from-home situation continued in the fourth quarter, demand for TV and IT products remained strong,” LG Display said in a statement.
Shipping and prices of organic light-emitting diode (OLED) panels increased for both TVs and smartphones, while good earnings were boosted by full-scale production at its Guangzhou OLED factory, the company said.
Analysts highlighted increased shipments of OLED panels to Apple’s latest iPhone 12 and higher costs for liquid-crystal display (LCD) panels. LCD prices grew as a result of the increasing demand for TVs from global customers trapped at home due to the COVID-19 pandemic.
Apple’s iPhone shipments in the fourth quarter were likely to rise by 21 per cent on-year because of the iPhone 12’s great results, according to Counterpoint information.
Stronger iPhone revenues are projected to spill over to LG Display’s first-quarter result, analysts said.
Kim Kwang-jin, an analyst at Yuanta Securities Korea said that the first half of the year is normally a seasonal down-cycle, but this year is a different one. It will continue to swing to benefit, as iPhone 12 deliveries are projected to boost panel shipments by 1.5 to 2 times the volume a year ago.
LCD panel prices are also expected to stay high in the first quarter, he added.
Power outage at Nippon Electric Glass’ Japan-based glass manufacturing facility in December may impact first-quarter shipments of LG Display, as some 80 per cent of its glass came from NEG in the first half of 2020, analysts said.
But the lower availability of large-scale glass could further increase the prices of panels in the first quarter, offsetting the effect of any decline in shipments, they added.
Revenue grew by 16 per cent to KRW 7.5 trillion, LG Show said in a regulatory filing. Its shares declined by 0.6 per cent by 01:16 GMT (6:46 am IST) compared to a 0.9 per cent growth in the broader market, which analysts put into profit-taking.
