[THE INVESTOR] Display maker LG Display said on Oct. 24 that its OLED TV panel business swung to a profit for the first time since it started production five years ago.
Announcing its third-quarter earnings on the day, the company said it has returned to a profit with an operating income of 140.1 billion won (US$123 million). It posted an operating loss in the first two quarters consecutively this year, while its Q3 revenue came in at 6.1 trillion won.
Price increase of LCD panels during the three months and robust demand for high-end products like OLED displays contributed to the turnaround.
In the OLED TV segment, in particular, LGD sold 1.7 million panels, up from 200,000 in 2013.
However, both operating income and sales in the third quarter have dropped significantly on-year, by 76 percent and 12 percent, respectively.
Market analysts said falling prices and oversupply in the global LCD markets are some of the main causes of the profit drop.
Heated competition with Chinese LCD makers, such as BOE, has also made things unfavorable for the Korean firm. BOE, which shipped 25.6 million TV LCD panels in the first half this year, became the largest LCD panel maker by shipments, beating the display subsidiary of LG Group.
The LCD business accounts for nearly 90 percent of the Korean display firm’s sales.
“Although LGD's business will likely remain profitable in the latter half, it could be in the red again from the first half next year,” said Lee Seung-woo, an analyst from Eugene Investment & Securities, citing global economic uncertainties and unpredictable demand for OLED TV panels next year.
LGD said it would go all out to nurture next-generation display businesses down the road.
“The company is standing at the crossroads as it prepares to shift focus from LCD to OLED,” said CFO Kim, pledging to speed up the transition for future growth.
By Kim Young-won (firstname.lastname@example.org)