LG Innotek succeeded in making an early turnaround despite slow market by increasing sales of differentiated products. It is expected that its performance will be even greater in the third quarter when it is expected to see effects from supplying its products to Apple.
LG Innotek publically stated that it made $1.29 billion (1.5223 trillion KRW) and $15.9 million (18.8 billion KRW) in sales and operating profit respectively during the second quarter. Compared to the second quarter of 2018, its sales and operating profit increased by 0.3% and 40.1% respectively. Its sales and operating profit easily surpass consensus on sales ($1.27 billion (1.4979 trillion KRW)) and operating profit ($6.78 million (8 billion KRW)) made by stock firms.
“Although there have been uncertainties due to slow demands for Smartphones and the trade conflict between the U.S. and China, we were able to make a turnaround in just one quarter by selling more differentiated products in multiple camera module market and display substrate material market.” said a representative for LG Innotek.
LG Innotek’s Optical Solution Division made $706 million (830.1 billion KRW) in sales during the second quarter that is 2% increase compared to the second quarter of last year. Compared to the first quarter, its sales increased by 25%. Although overall demands for Smartphone camera modules were stagnant, there was an increase in sales of high-end parts such as triple-camera module. It was effective for LG Innotek to supply its high-performance triple-camera modules to LG Electronics for ‘LG V50 ThinQ’, which is drawing positive reviews from markets, at the right time.
Although LG Innotek’s Substrate & Material Division’s sales in the second quarter decreased by 6% compared to the second quarter of last year, its sales ($235 million (277 billion KRW)) increased by 8% compared to the first quarter of this year. Although there were fewer demands for mobile substrates, there was an increase in sales of state-of-the-art semiconductor parts such as package substrate and high-resolution display parts such as tape substrate and photomask.
LG Innotek’s Automotive Electrical Part Division made $224 million (264.7 billion KRW) in sales during the second quarter that is 10% increase compared to the second quarter of last year due to increase in sales of ADAS (Advanced Driver Assistant System) camera module and automotive telecommunication module.
LG Innotek’s LED Division made $78 million (92 billion KRW) in sales during the second quarter that is 22% and 12% decrease compared to the second quarter of last year and the first quarter of this year respectively. It experienced a decrease in sales of low-profit products such as light source for normal lighting while it was trying to make its corporate structure more efficient centered on high-valued products.
It is likely that LG Innotek will be able to continue this positive trend during the third quarter. Its performance is likely to jump greatly as it mass-produces triple-cameras on full-scale for Apple’s new iPhone. Stock firms’ consensus on LG Innotek’s sales and operating profit in the third quarter are $1.97 billion (2.3438 trillion KRW) and $112 million (132 billion KRW) respectively.
“LG Innotek is planning to supply its triple-cameras for two new Smartphone models starting from the third quarter.” said Park Kang-ho who is a researcher from Daishin Securities. “It is estimated that its operating profit will greatly exceed estimations made by stock firms when it is based on high market shares, high average supply price, and stable yields.”
Staff Reporter Jung, Hyeonjung | iam@etnews.com