The Korean LCD panel maker netted an operating profit of 44.5 billion won in the 4th quarter of 2017 ended on December 31st, 2017, a 95% year-on-year drop, on consolidated revenue of 7.13 trillion won, which was also down 10% year-on-year.
Plunges in the price of LCD panel played a havoc with its profitability and revenue, as the market was glutted with a deluge of capacity. Adding to pains was a strong Korean won currency, which ate into the operating profit when they were converted into US dollars. Heavy depreciation costs turned out to hurt them, too, as the panel maker is heavily investing to build organic light-emitting diode or OLED panel facilities.
According to market research firm WitsView, prices of large-size LCD panel prices fell 20~40% in 2017 after it rose high enough to constrain demand for large-size TVs in late 2016.
China's aggressive investment in production capacity as well as high fab utilization have factored into to glut the market with excess capacity, as companies like Foxconn, BOE, and CSOT are heavily investing to build mammoth 10.5th generation LCD production facilities in China.
Meanwhile, the Korean display maker sees new market opportunities, as more TV makers are turning to OLED display to make their premium TVs. The Korean display maker will also be supplying small-size OLED display for Apple’s iPhone sometime in the year.
LG Display is the only maker in the world that is now not only producing large-size OLED panels, but also churning out small-and medium size OLED panels in high volume.
In December, LG Display has earned approval from Korean government of its 5trillion won plan to build an OLED panel production facility in China.
LG Display said “Although short-term earnings have been impacted by weakening LCD panel prices, our progress in the OLED business will soon recover and push the growth of the company.”
