LG Display’s Earnings Expected to Exceed Expectations in 2Q24, Signaling Strong OLED-Led Recovery

LG Display Logo on hot coals

A recent financial analysis report from Kiwoom Securities in South Korea is painting a bright picture for LG Display. The company is poised to surpass market expectations with its second-quarter 2024 earnings, driven by significant improvements in its OLED business and favorable exchange rates, marking a critical step towards normalization for the company.

The company projects an operating loss of KRW 244.6 billion ($175 million) for 2Q24, a notable reduction compared to the market consensus of KRW 357.7 billion ($257 million) and internal estimates of KRW 315.8 billion ($227 million). This positive outlook is bolstered by continued strength in the KRW/USD exchange rate and robust performance in its OLED segment. Sales for the quarter are anticipated to reach KRW 6.4162 trillion ($4.61 billion), representing a 22% quarter-on-quarter (QoQ) increase and a 35% year-on-year (YoY) surge. Key factors include leveraging its competitive edge in two-stack Tandem OLEDs for IT OLED panels, a projected 47% QoQ increase in WOLED panel shipments driven by European sports events, and the mass production of POLED panels for new products starting at the end of 2Q24.

Looking ahead to 3Q24, LG Display forecasts a return to profitability with an operating profit of KRW 56 billion ($40 million) on sales of KRW 7.1723 trillion ($5.15 billion), reflecting a 12% QoQ and 50% YoY increase. This turnaround is expected to be fueled by the full-scale impact of POLED panel production for new models and continued growth in WOLED panel shipments. For the full year, OLED panel shipments for mobile and TV applications are expected to rise by 27% YoY and 40% YoY, respectively, exceeding internal projections of 23% and 33%. Consequently, the company projects 2024 sales to reach KRW 27 trillion ($19.38 billion), up 27% YoY, with an operating loss of KRW 296.5 billion ($213 million), a marked improvement over market expectations of a KRW 423.8 billion ($304 million) loss.

LG Display’s strategic focus on expanding OLED panel shipments across TV, IT, and mobile applications is driving its performance improvements. Additionally, recent price increases in LCD panels and the anticipated reevaluation of the Guangzhou LCD fab sale’s value are expected to contribute positively. The company plans to reduce its LCD business, which is expected to lead to a reevaluation of its long-term corporate value. Reflecting these shifts, the OLED business’s revenue share is projected to grow from 48% in 2023 to 60% in 2024 and 70% by 2025. Furthermore, the expected end of depreciation for the Guangzhou WOLED production line in the second half of 2025 will likely sustain profit improvements centered on the OLED business unit for years to come.

In line with expectations of future profitability, LG Display is accepting voluntary retirement applications from production workers at its Paju and Gumi plants who have worked for over three years or are over 28 years old. This expands eligibility from last year when only workers over 40 could apply. Retirees will receive 36 months’ fixed salary. This move aims to reduce costs and improve efficiency due to a reduction in the LCD line. It is also unusual to see a company give people in their twenties the option to voluntarily retire.