Summary:
- LG Display’s First Profit in Four Years: LGD has transformed its OLED business, achieving profitability for the first time since 2019.
- Market Dynamics: South Korean panel manufacturers face stiff competition from Chinese firms, prompting a pivot toward OLED technology.
- Financial Growth: Significant gains in OLED revenue, contributing to overall financial recovery and enhanced operational efficiency.
On November 10, LG Display (LGD), a subsidiary of South Korea’s LG Group, announced a significant turnaround in its financial performance. After four challenging years marked by continual losses, the company reported its first profit, largely due to strategic restructuring in its OLED business.
Historically, South Korean companies like Samsung and LG have dominated the display panel market, providing essential components for mobile phones, monitors, and televisions. However, the landscape has shifted dramatically in recent years. With the rapid ascent of Chinese panel manufacturers, Korean firms have been compelled to retreat from the LCD sector. This competitive pressure has served as a catalyst for LGD, prompting a refocus on its strengths in OLED technology, which has ultimately led to its recent financial recovery.
According to data released by South Korean regulatory authorities, LGD recorded a revenue of 6.96 trillion won (approximately $4.78 billion) in the third quarter, alongside an operating profit of 431 billion won. The company also achieved an EBITDA pre-tax profit margin of 20.5%, indicating a simultaneous improvement in both profitability and operational efficiency. In total, the cumulative profit for the first three quarters stands at 328.5 billion won, a strong indicator of ongoing recovery.
Given the upward trajectory of OLED panel shipments, LGD is well-positioned to maintain its profitability throughout the year. This marks a crucial milestone for the company—it’s the first profitable year since 2019.
LGD pioneered the 55-inch OLED panel back in 2013 and has since expanded its OLED offerings across various markets, including mobile phones and high-end TVs. The company’s strategic decision to focus on high-quality OLED technology has positioned it as a leading player in premium market segments, boosting both market share and technological prowess.
In 2020, OLED panels accounted for just 32% of LGD’s revenue. This share has grown significantly, reaching 48% in 2023 and projected to rise to 55% by 2024. By Q3 of this year, OLED revenue hit approximately 65%, with expectations to exceed 60% in the coming year. This surge not only signifies the increasing market demand for OLED technology but also positions LGD for a robust financial outlook in 2024, with an expected performance improvement of 2 trillion won over 2023.
As competition intensifies, LG Display’s ability to pivot towards OLED technology and capitalize on its inherent advantages could prove vital for sustaining profitability and market leadership. The success story of LGD could serve as a blueprint for other manufacturers navigating similar challenges in the volatile display panel industry.
In summary, LGD’s successful transformation highlights the significant role that innovation and adaptability play in maintaining competitiveness. With OLED technology at the forefront of its business strategy, LGD is not only reversing years of adversity but is also setting the stage for future expansion in an evolving market landscape.
