South Korea's LG Display Co Ltd on Wednesday guided for a second-half earnings recovery, signaling a pickup for the struggling panel industry as clients prepare to launch new gadgets such as smartphones.
The firm also unveiled plans to invest 1.99 trillion won ($1.75 billion) to boost production of organic light-emitting diode screens for mobile devices, as smartphone makers increasingly adopt the next-generation technology.
"Overall profitability in the second half of the year is expected to further improve due to stabilized panel prices," LG Display Chief Financial Officer Don Kim said in a statement.
The world's top liquid crystal display maker said April-June profit fell 91 percent from a year earlier to 44 billion won ($38.79 million), compared with a 43 billion won profit tipped by a Thomson Reuters StarMine SmartEstimate derived from a survey of 11 analysts. Revenue fell 13 percent to 5.9 trillion won.
Global economic uncertainty has undercut demand for electronics devices and squeezed margins for components makers such as LG Display, Samsung Electronics Co Ltd unit Samsung Display Co Ltd and Sharp Corp.
Key client Apple Inc on Tuesday said it sold 40.4 million iPhones in the third quarter, down 15 percent from the year-ago quarter but slightly ahead of market expectations.
LG Display shares were unchanged as of 8.42 p.m. ET, in line with the broader market.
LG Display said it would invest 1.99 trillion won to build a new production line for flexible organic light-emitting diode (OLED) displays. Apple is expected to use OLED screens for its iPhones as early as next year.
Monthly output capacity for the new production line, which will start mass production in second half of 2018, could be more than four times that of an existing facility based on surface area.
LG Display said second-quarter panel shipments by surface area rose 5.1 percent from the previous quarter while average selling prices fell 4 percent.
Chief Executive Han Sang-beom has said conditions are tougher this year than 2015, although there have been some signs of improvement in the second quarter. Panel prices for some televisions, tablets and monitors picked up in June, according to research house IHS.
Researcher TrendForce said in late June there could be a mild shortage of large-sized LCD panels as television makers prepared for peak shipments season during the third quarter.
Even with the tougher conditions this year LG’s plans to invest 1.99 trillion won to boost production of organic light-emitting diode screens for mobile devices, should improve LG’s third quarter, even though average selling prices fell 4 percent, as the majority of smartphone makers increasingly adopt the next-generation technology stated Jane Suki tech analyst for Empire Asset Investments.