LG Display’s Q2’23 Financials Point to Expansion of OLED Business

LG Display Logo on hot coals

LG Display has released its unaudited earnings results for the three-month period ending June 30, 2023. The company’s performance in the second quarter showed signs of improvement despite facing ongoing challenges in the market. According to the financial statement, LG Display’s revenues for the second quarter of 2023 increased by 7% to KRW 4,739 billion ($3.7 billion) compared to KRW 4,411 billion ($3.4 billion) in the previous quarter. However, the revenues declined by 15% year-on-year from KRW 5,607 billion ($4.4 billion) in the second quarter of 2022.

In terms of operating loss, the company reported KRW 881 billion ($688 million) in the second quarter of 2023. This represents a reduction in operating loss compared to the first quarter of 2023, where the loss stood at KRW 1,098 billion ($857 million). In the same period last year, LG Display had recorded an operating loss of KRW 488 billion ($381 million).

Despite the operating loss, there was a positive development in EBITDA (earnings before interest, taxes, depreciation, and amortization) profitability. The second quarter of 2023 saw an EBITDA profit of KRW 130 billion ($102 million), a significant improvement from the EBITDA loss of KRW 80 billion ($62 million) in the first quarter of 2023. In the second quarter of 2022, LG Display’s EBITDA profit had been KRW 662 billion ($517 million). However, the company reported a net loss of 699 KRW billion ($546 million) in the second quarter of 2023, which indicates a decline from the net loss of KRW 1,153 billion ($900 million) in the first quarter of 2023. In the second quarter of the previous year, the net loss was KRW 382 billion ($298 million). The company’s performance improvement in the second quarter can be attributed to increased revenues and continuous efforts to reduce costs through innovations in its cost structure, inventory management, and operational efficiency.

LG Display attributes some of its challenges to reduced panel inventory levels across the industry’s ecosystem. Inventory adjustments in downstream industries, particularly in TV and IT products, have been ongoing since the previous year. However, the company experienced increased demand and shipments of mid- and large-sized panels, particularly for OLED TVs, in the second quarter, resulting in a rise in area base panel shipments and revenues compared to the first quarter. In terms of revenue breakdown, panels for TVs accounted for 24% of revenues, while panels for IT devices, including monitors, laptops, and tablet PCs, accounted for 42%. Panels for mobile and other devices contributed 23% to revenues, and panels for automobiles represented 11%.

Looking ahead, LG Display has outlined its business strategy to focus on the market-to-order business and expand its proportion of OLED businesses. The company aims to increase its share of total revenues from the market-to-order business from 40% to over 50% next year and over 70% within the next two to three years.

In the large-sized and small- and mid-sized businesses, LG Display plans to raise the proportion of OLED panels to enhance competitiveness. The company expects its overall OLED revenue to exceed 50% of its total revenues this year. For the small- and mid-sized OLED businesses, LG Display intends to expand shipments of mobile devices leveraging its increased production capacity and prepare for robust mass production and supply in 2024, based on its technological leadership in the IT OLED market. The company will capitalize on OLED’s fundamental competitiveness to reinforce its premium TV market position and actively pursue emerging markets like gaming OLED and transparent OLED sales. Regarding its automotive display business, LG Display said to expect more of the same.

Sung-hyun Kim, CFO and senior vice president at LG Display, remains optimistic about the future despite macroeconomic uncertainties. The company expects a rise in demand for panels in the latter half of the year due to the recovery and stability of inventory levels in the industry’s ecosystem. LG Display is also hopeful for a turnaround in profit in the fourth quarter, driven by the expansion of its market-to-order business, including increased panel shipments for mobile products. Kim emphasized that despite the challenges, LG Display is committed to accelerating the advancement of its business structure and enhancing its performance while maintaining financial soundness.