LG Display posted a weak earnings report for the third quarter of this year, with both revenue and operating profit declining compared to the same period last year. The decline in the won-dollar exchange rate and "chipflation" (inflation driven by rising semiconductor prices) due to the sharp surge in memory semiconductor prices weighed on profitability.
LG Display disclosed its third-quarter consolidated results, reporting revenue of 6.277 trillion won and an operating profit of 250.6 billion won. Revenue fell by 9.8% and operating profit dropped by 41.9% compared to the same period last year.
Revenue decreased as shipments of mid-sized LCD (liquid crystal display) products declined, in line with a product portfolio management strategy focused on profitability. The deterioration of the external business environment, including the drop in the won-dollar exchange rate and rising memory semiconductor prices, impacted operating profit.
The decline in the won-dollar exchange rate reduces the won-converted revenue of export products traded in dollars, putting pressure on profitability. The average won-dollar exchange rate for the third quarter of this year fell by 5.6% compared to the previous quarter. In particular, the display industry is sensitive to exchange rate fluctuations due to its high proportion of dollar-denominated transactions with global customers.
In addition, the sharp surge in memory semiconductor prices, such as DRAM and NAND flash, increased cost burdens for finished product manufacturers like smartphone and PC makers, acting as a negative factor. As rising finished product prices and shrinking consumer demand continued, downward pressure emerged on display panel order volumes and prices.
However, shipments of large- and mobile-sized OLED products increased as they entered the seasonal peak period. Revenue and operating profit both improved compared to the previous quarter, driven by an expanded share of high-value-added products and operational efficiency improvements.
EBITDA (earnings before interest, taxes, depreciation, and amortization) stood at 1.2144 trillion won, recording a profit margin of 19%. Net income for the period was tallied at 755.6 billion won, benefiting from improved foreign currency translation gains and losses due to the decline in the end-of-period exchange rate.
LG Display plans to continue its business structure transition centered on OLED and build a stable profit structure based on differentiated technological competitiveness and cost innovation.
In the small- and mid-sized business segment, the company will expand its share of high-value-added products based on technological competitiveness and stable development and production capabilities. In the mobile sector, it will strengthen the competitiveness and supply capacity of premium products, while in the IT sector, it will focus on improving profitability through business operations centered on high-value-added products and cost reduction.
In the large-sized business segment, LG Display will intensify its offensive in the premium market by leveraging its proprietary OLED technology. For TV OLEDs, it will enhance the competitiveness of premium products while responding to customer demand with products that offer price competitiveness. For monitor OLEDs, it plans to expand its gaming OLED product line applying proprietary technology to broaden its market position.
Kim Seong-hyun, CFO (Chief Financial Officer) of LG Display, said, "Amid the continued uncertainty in the external business environment, including exchange rate and component price fluctuations in the third quarter, we focused on strengthening business competitiveness and operational efficiency."
He added, "We will continue to pursue securing differentiated technological competitiveness and cost innovation to enhance our ability to respond to changes in the external environment and further strengthen the foundation for stable profit generation."
in INDUSTRY
