LG Display recorded an “earning surprise” in the fourth quarter last year despite the COVID-19 pandemic. By actively securing demands for displays that have been increasing rapidly due to the spread of the contactless economy, it was able to make an operating profit for two quarters in a row. It has also succeeded in revamping by drastically reducing total operating loss, which was well over $900 million (1 trillion KRW) in 2019, to about $18 million (20 billion KRW).
The company announced on Wednesday that the company and its subsidiaries recorded $21.9 billion (24.2301 trillion KRW) and $26.2 million (29.1 billion KRW) in total revenue and total operating loss respectively in 2020. The total revenue increased by 3.2% compared to 2019 when the revenue was $21.2 billion (23.4756 trillion KRW). The company and its subsidiaries were able to drastically reduce the amount of their operating loss by 97% when the amount was $1.23 billion (1.3594 trillion KRW) in 2019.
Their performance in the fourth quarter was an earning surprise that easily exceeded expectations from stock firms. In the fourth quarter, they made $6.73 billion (7.4612 trillion KRW) and $618 million (685.5 billion KRW) in total revenue and total operating profit respectively. The revenue increased by 16% compared to the fourth quarter of 2019. LG Display and its subsidiaries were also able to turn their operating loss of $380 million (421.9 billion KRW) in the fourth quarter of 2019 into operating profit.
Stock firms initially estimated their operating profit in the fourth quarter to fall somewhere between $180 million (200 billion KRW) and $360 million (400 billion KRW). However, LG Display and its subsidiaries recorded an operating profit that was well over stock firms’ estimations and succeeded in recording an operating profit for two quarters in a row.
Such performance is the result of the spread of the contactless economy. As more people have been spending their times on leisure and business indoors, there has been a sharp increase in demands for displays such as TVs and PCs that use displays. LG Display and its subsidiaries were able to create synergy as amounts of supply of OLED panels that are used for large TVs and LCD panels that are mainly used for IT devices had gone up together.
An increase in LCD panel prices due to prolongation of COVID-19 also contributed to the drastic increase in their profit ratio. According to a market research company Omdia, the average price of 55-inch LCD TV panel (based on UHD) was $170 in December last year. The price started to go up since June and hit its highest point of the year in December.
Looking at sales of LG Display and its subsidiaries in the fourth quarter based on different panels, 37% of their sales came from IT panels which was the highest percentage. 29% of the sales came from TV panels while the rest of the sales came from mobile panels and others.
Their net profit and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in the fourth quarter were $560 million (621 billion KRW) and $1.60 billion (1.7743 trillion KRW) respectively. As their operating profit improved, their EBITDA rate also improved greatly and marked the highest rate in the past 15 quarters with 24%.
LG Display plans to expand its OLED portfolio and output in order to secure variety of customers this year. It is going to release the new 83-inch OLED panel and also work on production of 42-inch OLED panels that are perfect for gaming. For this year, it is looking to make somewhere between 7 million and 8 million panels that will be about an 80% increase from last year. Regarding the global LCD market where the LCD selling price continues to go up, it plans to be flexible with production plans and make necessary actions.
CFO Seo Dong-hee of LG Display said that the fourth quarter performance is the result of swift actions towards the contactless economy and increased sales from the OLED business.
Staff Reporter Yun, Heeseok | firstname.lastname@example.org