SEOUL (Reuters) - Apple supplier LG Display Co Ltd posted a smaller-than-expected quarterly loss on Friday and offered an optimistic outlook for the year on higher demand for its organic light-emitting diode (OLED) panels, sending its shares up 4%.
The forecast comes after a rough year for the South Korean company that saw a prolonged decline in liquid crystal display (LCD) panel prices, a management shake-up, and costs from restructuring and strategy changes.
The company has said it will halt domestic production of LCD TV panels by the end of the year and is now investing heavily in OLED displays that are generally thinner and allow more flexibility in device design than LCDs.
“In the second half of the year, revenue from our large OLED panels will rise steeply in line with the increase in production from (the firm’s) Chinese OLED fab,” LG Display’s Chief Financial Officer Suh Dong-hee said on an earnings call.
The company, which recently became a plastic-OLED display vendor for Apple Inc’s latest iPhones, has said it expects to kick off mass production at its China OLED factory some time in the March quarter.
LG Display has not yet closed any of its Chinese factories since the outbreak of a new coronavirus which has killed over 200 people in the country and infected thousands, the company said, adding the matter increased uncertainty on the LCD supply side.
The company posted a loss of 422 billion won ($361.6 million) in the October-December quarter, compared with an operating profit of 279 billion won a year earlier.
Analysts expected a 578 billion won loss, according to Refinitiv SmartEstimate.
LCD panel prices have been falling for two-and-a-half years in a market crowded with Chinese makers. The glut has forced LG Display and rival Samsung Display - a unit of Samsung Electronics Co Ltd - to cut output, a move analysts said could take some pressure off prices this year.
Prices have risen slightly since late December, but on Thursday, Samsung Electronics said it nevertheless expected the business to remain weak in 2020.
“South Korean display makers including LG Display could benefit from a recent uptick in LCD prices, but LG Display will likely speed up its transition to OLED business as the global LCD market has long been suffering from a supply glut,” said analyst Kim Chul-joong at Mirae Asset Daewoo Research.
Shares of LG Display were up 4.4% as of 0230 GMT, compared with the broader KOSPI’S 0.4 gain.
Reporting by Heekyong Yang; Additional reporting by Hyunjoo Jin and Joyce Lee; Editing by Sayantani Ghosh and Christopher Cushing