SEOUL (Reuters) – South Korea’s LG Display Co Ltd on Wednesday warned of weaker panel prices in the year ahead due to global economic uncertainty and U.S.- China trade tensions, as it posted a jump in quarterly profit thanks to surging sales of wearable screens.
FILE PHOTO – An LG Electronics’ logo is pictured on a TV displayed at a shop in Seoul, South Korea, April 26, 2016. REUTERS/Kim Hong-Ji/File Photo
The company said strong sales of high-end screens for smart watches helped improve profitability, even as overall sales fell due to weakness in the television segment.
The surge in profit from wearable screens underlines the Apple Inc supplier’s ongoing efforts to focus on high value-added products to fend off declining prices for large panels due to aggressive output from Chinese rivals.
“It seems hard to forecast a positive panel price trend for 2019,” Daniel Lee, head of LG Display’s Market Intelligence Division, told an earnings call, citing the U.S.-China trade war and panel oversupply.
Operating profit for October-December came in at 279 billion won ($249.7 million), from 44 billion won in the same period a year ago, LD Display said. Revenue fell 2.5 percent to 6.9 trillion won.
Operating profit was above a 132 billion won forecast of 10 analysts based on I/B/E/S Refinitiv data, but the company’s shares fell more than 4 percent following the results on concerns for panel prices, analysts said.
“The negative panel price outlook given by the company is dragging down the shares,” said Lee Won-sik, an analyst at Shinyoung Securities.
LG Display said it expected panel shipments to fall by a high-single-digit percentage in the first quarter compared with the previous quarter due to seasonally weak demand. It gave no specific guidance on the full-year price outlook.
Weaker global smartphone sales particularly in China, the world’s biggest market, have clouded the outlook for electronics makers including Apple, which said sales for the current quarter would most likely be lower than Wall Street expected.
Even so, the U.S. tech giant told analysts on an earnings call it had seen strong growth in sales of wearable devices including the Apple Watch in the fourth quarter.
Shinyoung Securities analyst Lee said increasing demand for LG Display’s smaller liquid crystal display (LCD) panels helped to offset poor sales of its LCD panels for Apple’s struggling XR smartphone.
LG Display shares fell 40 percent last year amid a global tech selloff prompted by investor fears over the impact on supply chains of the U.S.-China trade war.
The stock was down 4.2 percent as of 0419 GMT versus the wider market’s 0.7 percent rise.
Reporting by Heekyong Yang and Ju-min Park; Editing by Stephen Coates