SEOUL (Reuters) – South Korea’s LG Display Co Ltd reported its highest quarterly profit in over three years on Wednesday, with help from increased shipments of Apple Inc’s new iPhones.
The Apple supplier posted an operating profit of 685 billion won ($622 million) in the fourth quarter of 2020, compared with a loss of 422 billion won in the same period a year earlier.
It was the display panel firm’s highest quarterly profit since the second quarter of 2017, and soundly ahead of market expectations for a 286 billion won profit, according to a 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.
Shipments and prices of organic light-emitting diode (OLED) panels rose for both TVs and smartphones, while the strong earnings were helped by full-scale production at its Guangzhou OLED plant, the company said.
Analysts highlighted increased shipments of OLED panels for Apple Inc’s new iPhone 12 and higher prices for liquid-crystal display (LCD) panels. LCD prices rose on the back of growing demand for TVs from global consumers stuck at home due to the COVID-19 pandemic.
Apple’s iPhone shipments in the fourth quarter were likely up 21% on-year due to the strong performance of the iPhone 12, according to Counterpoint data.
Stronger iPhone sales should spill over into LG Display’s first quarter result, analysts said.
“The first half of the year is usually a seasonal down-cycle, but this year is different. It will continue to swing to profit, as iPhone 12 sales are expected to increase panel shipments by 1.5 to two times the amount a year earlier,” said Kim Kwang-jin, an analyst at Yuanta Securities Korea.
LCD panel prices should also remain high in the first quarter, he said.
LG Display, which had previously said it planed to halt domestic production of LCD TV panels by 2020, said in an earnings call on Wednesday that it will be flexible on domestic production based on market conditions this year.
A power outage in Nippon Electric Glass’ (NEG) Japan-based glass manufacturing facility in December may affect LG Display’s first-quarter shipments, as about 80% of its glass came from NEG in the first half of 2020, analysts said.
But the lower supply of large-sized glass could further lift panel prices in the first quarter, offsetting the impact of any fall in shipments, they added.
Revenue rose 16% to 7.5 trillion won, LG Display said in a regulatory filing.
Its shares fell 5% on Wednesday compared with a 0.6% drop in the wider market, which analysts put down to profit-taking. The stock has still gained some 63% since the start of November.
($1 = 1,101.0000 won)
(Reporting by Joyce Lee and Heekyong Yang; Editing by Chris Reese, Richard Pullin and Kim Coghill)