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Earnings

LG Display turns to black in 2021 after three years

The display maker's OLED TV panel division turned profitable in H2, 2021 reversing seven years of losses

By Jan 27, 2022 (Gmt+09:00)

3 Min read

LG Display's next-generation, 30% brighter OLED panel unveiled in December 2021
LG Display's next-generation, 30% brighter OLED panel unveiled in December 2021

South Korea's LG Display Co. swung to an operating profit in 2021 after two consecutive years of shortfalls, led by a sharp rebound in LCD panel prices and growing shipments of OLED TV panels.

The unit of LG Electronics Inc., the world's largest OLED TV maker, said on Wednesday its organic light-emitting diode (OLED) TV panel division turned profitable in the second half of last year and reached a breakeven point for the year, reversing losses posted for the previous seven years.

The company's full-year operating profit came in at 2.2 trillion won ($1.8 billion) last year on a consolidated basis, despite a 30% decline on-year in fourth-quarter earnings. That compared with the previous year's operating loss of 36.5 billion won and a shortfall of 1.4 trillion won in 2019.

Consolidated sales increased by about one-fourth to 29.9 trillion won in 2021 from a year earlier.

"Our OLED panels have built the basis for profitable growth and we also plan to stabilize our profit structure in the LCD sector by shifting our focus to high-end IT products,” LG Display CFO Kim Sung-hyun said in a statement on its 2021 results.

This year, the display maker plans to boost OLED panel production by one-fourth to 10 million units from the year previous and tighten its lead in the premium TV panel market.

To do so, it will begin the mass production of the next-generation OLED panel dubbed OLED EX in the second quarter of 2022, applying the 30% brighter panel to its entire OLED TV panel series.

"With its OLED technology, the company aims to enter new business areas such as gaming and transparent displays, which will deliver new customer values and experiences," LG said in the statement.

OLED TV panel shipments increased by more than 70% in 2021 compared to the previous year.

As the global OLED TV market grew to an annual output of 6.5 million units according to market tracker Omdia, its panel market has achieved economies of scale, LG said.

LG Display is an exclusive supplier of OLED panels to an unidentified major TV manufacturer, other than LG Electronics, which commands over 60% of the world's OLED TV market.

OLED is highlighted by self-illuminating pixels that do not require a separate light source and are widely used in high-end electronic goods, including gaming TVs.

LCD PANELS, Q4 RESULTS

Soaring demand for TVs amid the stay-at-home trend also drove LCD panel prices sharply higher, which led LG to push back its plan to scale back the LCD panel business.

Before the COVID-19 pandemic, aggressive marketing by low-cost Chinese panel makers had eaten into the profit margins of LCD suppliers.

But the LCD TV panel market suffered a price fall in the fourth quarter, resulting in a 30% tumble in LG's operating profit for the quarter. One-off costs that occur at the end of the year also weighed on its earnings.
 
The company's operating profit of 476.4 billion won for the October-December quarter missed the market consensus of 638.6 billion won, despite a 17.5% rise on-year in sales to 8.8 trillion won in the fourth quarter of last year.

LG INNOTEK, SAMSUNG ELECTRO-MECHANICS

Other electronic parts makers posted robust earnings last year.

LG Innotek Co., a manufacturer of mobile phone parts such as camera modules, reported an 85.6% spike on-year in operating profit to 1.3 trillion won for all of 2021. Sales climbed 56.6% to 14.9 trillion won during the same period, aided by its shipments to Apple Inc.

Its local rival Samsung Electro-Mechanics Co. said on Wednesday its consolidated operating profit surged 62.9% to 1.5 trillion won in 2021 from a year before, with sales up 24.8% to 9.7 trillion won. 

Write to Young-Suk Song at click@hankyung.com
Yeonhee Kim edited this article.
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