South Korea’s LG Display Co Ltd booked an 80 percent surge in quarterly profits just ahead of expectations, helped by strong demand for its screens used in high-end TV sets as well as mobile devices ahead of the year-end holidays.
The world’s largest maker of liquid crystal displays (LCDs) also forecast shipments of screens would increase by “a mid-single digit percent” in the current quarter.
Analysts have warned, however, that hefty investments into organic light-emitting diode (OLED) displays as well as some price declines for screens could begin to weigh on profits.
Operating profit for July-September for the Apple Inc supplier came in at 586 billion won (519 million US dollars), better than an average analyst estimate of 567 billion won. Revenue rose 3.7 percent.
“Mobile LCD panel sales have been supported, partly due to the release of the latest iPhone. And although large-size panel prices have been falling, LG has been able to hold its ground well on the strength of its premium products,” said Kim Yang-jae, an analyst at KTB Investment & Securities.
He added that demand for screens for notebook and PCs had been better than expected, remaining flat after years of declines.
Asked to comment on any signs of weak demand for mobile LCD screens, Chief Financial Officer Don Kim said only that demand from clients continued to be strong. Concerns about sluggish demand for Apple’s iPhone 8, which uses LCD screens, had pushed Apple’s shares lower last week.
While robust demand for TVs spurred a spike in panel prices last year, helping LG Display log record profits in the first quarter of 2017, declines in prices this year are a concern for the industry.
According to data provider WitsView, prices of television LCD panels larger than 43 inches began falling in May, with the pace of declines tending to accelerate from the end of the second quarter.
LG Display said, however, it expects overall price erosion to slow in the fourth quarter.
Shares in LG Display were up 0.5 percent in afternoon trade compared with a 0.2 percent climb for the broader market.