LG Display announced its first quarter earnings on Wednesday, showing a steep decline in operating and net profits for the display-panel-making affiliate of LG Electronics. The TV and smartphone display manufacturer reported a 99.8 percent drop in Q1 2016 net profit to 1.2 billion won ($1 million) from 475.8 billion won in the same period the previous year.
According to the Financial Times, LG Display's operating profit during the January-March period was 39.5 billion won ($34.43 million), which is the poorest since Q1 2012 and a 95 percent decrease from the same period in 2015. The sales had also dropped 14.7 percent year-on-year (YoY) to 5.9 billion won, the report added.
LG Display warned of challenging market conditions, citing slow global economic growth and industry oversupply.
LG Display makes display panels for TVs, smartphones, tablets, monitors and notebooks. A major share — 38 percent — of the company's revenue is sourced from the TV panels, while mobile and monitors make up 23 percent and 15 percent, respectively. Tablets and notebooks together accounted for 24 percent of the company's Q1 2016 revenue. The company had total revenue of 5.989 trillion won ($5.22 billion) during the period.
LG Display broke down the specifics of its quarterly earnings and said the Q1 panel shipments by surface area declined 7.7 percent compared to Q4 2015. The average selling price also declined 17 percent, which shifted the company's focus towards displays measuring 60 inches to rake in greater profits.
LG Display is hopeful for the second-quarter earnings. "Panel shipments in the second quarter of 2016 are expected to increase by a mid-single-digit percentage compared to the first quarter," Reuters quoted LG Display's Chief Financial Officer Don Kim as saying.
According to the company, the upcoming global sports events such as UEFA Euro 2016 and the Olympic Games in Rio de Janeiro, and China's Labor Day sales, will increase the shipments and warrant new product launches.
Samsung leads the market for small-size OLED displays for smartphone, while LG Display's dominance is in the large-size TV panels. LG Display is one of the largest providers of Apple's LCD panels for iPhones and flexible OLED panels for the Apple Watch. But there have been reports that Samsung is trying to win Apple's exclusive partnership to supply OLEDs for future iPhones.
"LG Display is likely to be left empty-handed next year in terms of OLED supply for Apple's premium phones as it has no capacity for small-size OLED production," Kim Young-Woo at SK Securities was quoted as saying by FT.