LG Display Co. (034220), which supplies panels for Apple Inc.’s iPhone and iPad devices, reported third-quarter profit that missed analysts’ estimates as weaker demand from China forced producers to cut TV screen prices.
Net income was 245 billion won ($230 million) in the three months ended Sept. 30, compared with 159 billion won a year earlier, the Seoul-based company said in a statement yesterday. The average of 20 analyst estimates compiled by Bloomberg was for a profit of 278 billion won.
Falling TV screen sales outweighed the gains the company made by boosting production of smaller displays for mobile devices. TV panel prices fell more than 8 percent in the third quarter and margins are approaching break-even levels, said Jonathan Hwang, a Seoul-based Daewoo Securities Co. (006800) analyst.
“Demand for TVs sharply slowed from June after the China government’s energy subsidy program was ended in late May,” Hwang said before the earnings release. “Weak profit from TV panels outweighed gains from mobile devices.”
Shares of LG Display, the world’s second-largest maker of flat panels, rose 0.2 percent to close at 24,300 won in Seoul yesterday, while South Korea’s benchmark Kospi index climbed 0.3 percent.
Operating profit, or sales minus the cost of goods sold and administrative costs, was 389.2 billion won on sales of 6.58 trillion won.
“Considering the continued drop in TV panel prices on top of foreign exchange rate moves, it seems inevitable that the operating profit will be lower in the fourth quarter” than the third quarter, Chief Financial Officer James Jeong said at an investor relations session.
Total display shipments in the fourth quarter are likely to increase at a “mid single digit” pace from the third quarter, Jeong said in a statement.
South Korean panel makers are betting bendable display technology will be widely adopted in the future for wearable devices, such as wristwatches or glasses. LG Display said last week it will begin mass output of flexible OLED panels for smartphones.
Sales of mobile displays, including tablet computers, accounted for 25 percent of LG Display’s revenue in the third quarter, up from 17 percent during the previous three-month period, the company said in a statement. TV panels accounted for 44 percent of sales, down from 51 percent the previous quarter.
Apple unveiled two new iPhones last month as part of its efforts to reach a broader range of customers. The Cupertino, California-based company sold a record 9 million iPhones in the first weekend of sales last month as the company rolled out the new devices to markets including China, Japan and the U.S.
Global shipments for liquid-crystal display models may fall 0.7 percent to 205.1 million units, market researcher TrendForce said Aug. 22. The final figure may be as low as 202 million units, it said.
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