As transaction price for LCD is decreasing continuously, it is predicted that Samsung Display and LG Display will record losses in LCD businesses in 1st quarter. Although amount of loss can be decreased as it is expected that amount of decrease in LCD price will slow down starting from 2nd quarter, current situation has it that importance of OLED business is becoming bigger as it can affect overall performance.
According to stock markets and industries on the 13th, operating profits of LCD businesses of Samsung Display and LG Display will convert to losses in 1st quarter because downward trend of average price of LCD panel will continue into March after average price of LCD panel had decreased from $70 to $66 from first half of January to first half of February.
It is estimated that amount of loss for Samsung Display’s LCD business in 1st quarter will become bigger as number of yields decreased as Samsung Display has applied new processes to its LCD fab in Suzhou and as price of LCD is continuously falling. Although overall operating profit will maintain surplus as number of foreign supplies of Smartphone OLEDS and Flexible OLEDS will increase, majority of markets believe that overall amount of surplus won’t be bigger due to loss in LCD business.
Samsung Display made $63.9 million (76 billion KRW) in operating loss of LCD business in 4th quarter of last year and is estimated to make $126 million (150 billion KRW) in loss in 1st quarter of this year. Because sales and operating profit will slightly decrease in OLED field, it is estimated that overall operating profit will greatly decrease from $252 million (299 billion KRW) in 4th quarter to $50.5 million (60 billion KRW) in 1st quarter.
Sense of crisis of LG Display, which supplies mainly large OLED panels, on 1st quarter’s performance is bigger because operating loss is continuously occurring in OLED business and amount of loss is becoming bigger for LCD business which is a main source of profit. It is predicted that LG Display’s operating profit will convert to loss in 1st quarter. Although it had made $51 million (60.6 billion KRW) in operating profit in 4th quarter of last year, majorities believe that LG Display will make a loss that is somewhere between $50.5 million and $75.7 million (60 billion KRW and 90 billion KRW) in 1st quarter of this year.
Because its large OLED panel business, which is its major business, is making losses continuously, prediction of its performance in 1st quarter is not too great. Markets predict that LG Display’s OLED Business Department had made about $673 million (800 billion KRW) in losses last year. Although markets estimate that those losses will decrease to about $421 million (500 billion KRW) this year due to increase in supply of OLED panels and improvement of yields, financial burden for LG Display will remain big if its LCD business goes through slump.
Stock markets predict that performance of panel manufacturers will become better slowly as downward trend of price of LCD panels will ease starting from 2nd quarter and as TV set businesses’ financial burden on stock will decrease. It is also a positive sign that overall financial burden of stocked LCDs is starting to decrease as Chinese panel businesses as well as South Korean panel businesses are increasing percentage of production of large panels.
“I predict that price of panels will stabilize starting from early 2nd quarter.” said Lee Won-sik who is a researcher for Hana Financial Investment Co., Ltd. “If TV set businesses start to accumulate panels in their stock to prepare for demands during Chinese Labor Day, price of panels will stabilize starting from 2nd quarter since price of certain panels can increase.”
Staff Reporter Bae, Okjin | email@example.com