South Korea's LG Display reported its highest quarterly profit in over three years on Wednesday, returning to the black for a second quarter in a row with help from increased shipments of Apple's new iPhone models.
The Apple supplier posted an operating profit of KRW 685 billion (roughly Rs. 4,500 crores) in the 2020 fourth quarter, compared with a loss of KRW 422 billion (roughly Rs. 2,800 crores) in the same period a year earlier.
It was the display panel firm's highest quarterly profit since the second quarter of 2017, and soundly ahead of market expectations for a KRW 286 billion (roughly Rs. 1,900 crores) profit, according to a Refinitiv SmartEstimate derived from 12 analyst estimates.
"As the global work-from-home situation continued in the fourth quarter, demand for TV and IT products remained strong," LG Display said in a statement.
Shipments and prices of organic light-emitting diode (OLED) panels rose for both TVs and smartphones, while the strong earnings were helped by full-scale production at its Guangzhou OLED plant, the company said.
Analysts highlighted increased shipments of OLED panels for Apple's new iPhone 12 and higher prices for liquid-crystal display (LCD) panels. LCD prices rose on the back of growing demand for TVs from global consumers stuck at home due to the COVID-19 pandemic.
Apple's iPhone shipments in the fourth quarter were likely up 21 percent on-year due to the strong performance of the iPhone 12, according to Counterpoint data.
Stronger iPhone sales should spill over into LG Display's first quarter result, analysts said.
"The first half of the year is usually a seasonal down-cycle, but this year is different. It will continue to swing to profit, as iPhone 12 sales are expected to increase panel shipments by 1.5 to two times the amount a year earlier," said Kim Kwang-jin, an analyst at Yuanta Securities Korea.
LCD panel prices should also remain high in the first quarter, he said.
A power outage in Nippon Electric Glass' (NEG) Japan-based glass manufacturing facility in December may affect LG Display's first-quarter shipments, as about 80 percent of its glass came from NEG in the first half of 2020, analysts said.
But the lower supply of large-sized glass could further lift panel prices in the first quarter, offsetting the impact of any fall in shipments, they added.
Revenue rose 16 percent to KRW 7.5 trillion (roughly Rs. 49,500 crores), LG Display said in a regulatory filing. Its shares fell 0.6 percent by 01:16 GMT (6:46am IST) compared with a 0.9 percent rise in the wider market, which analysts put down to profit-taking.
© Thomson Reuters 2021