OLED-focused strategy and Apple-linked shipments are expected to drive stronger second-half earnings
LG Display’s Gumi plant. (Photo courtesy of LG Display)
LG Display is increasing the likelihood of recovering a trillion-won operating profit this year for the first time in five years. The company recorded an operating profit of nearly 150 billion won (approximately $101 million) in the first quarter, even during a seasonal off-peak period when display shipments typically decline. Analysts suggest that achieving an annual operating profit of 1 trillion won is well within reach, as the company’s performance is expected to trend upward in tandem with Apple’s smartphone release schedule in the second half of the year.
The structural transformation of LG Display, which had recorded operating losses exceeding 2 trillion won just two years ago, began with the appointment of Chief Executive Officer Jeong Cheol-dong. The company successfully turned an operating profit starting last year as CEO Jeong, an engineer by background, emphasized a so-called one-team leadership approach, directing all business divisions from large-sized to small and medium-sized panels to focus on OLED (organic light-emitting diode) technology.
LG Display announced on April 24 that it recorded consolidated revenues of 5.534 trillion won and an operating profit of 146.7 billion won in the first quarter. Although revenues decreased by 9% compared to the first quarter of last year, operating profit increased more than fourfold.
This represents the largest first-quarter surplus since 2021, a period when the display industry was evaluated as enjoying a pandemic-driven boom. LG Display demonstrated steadily improved profit-generating capacity by achieving a surplus for three consecutive quarters, following an operating profit of 431 billion won in the third quarter and 169 billion won in the fourth quarter of last year.
First-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) reached 1.141 trillion won, resulting in an EBITDA margin of 21%. Due to the nature of the display industry, the structure inevitably entails significant depreciation costs associated with large-scale plant investments. A higher EBITDA margin signifies that the company is generating cash stably.
Up until 2023, LG Display was a company exhibiting operating losses that amounted to 2.5 trillion won. The figure who emerged in a rescue role at this time was CEO Jeong Cheol-dong. Having served as the CEO of LG Innotek since 2019, he transitioned to the position of the new head of LG Display in December 2023.
As a 40-year veteran of the LG group, CEO Jeong is evaluated as a technology expert who has extensively navigated through the company's components and materials affiliates.
CEO Jeong initiated operations to maximize profitability with a one-team spirit encompassing everything from large to small and medium-sized panels. At the time of his appointment, the OLED business was heavily concentrated on large-sized panels centered around televisions, but he sought to expand the supply of smartphone displays focusing on Apple, a core client. The company also targeted the tablet PC and laptop markets, which are medium-sized IT products, to increase delivery volumes primarily through its high-end lineup.
The company also streamlined its liquid crystal display (LCD) business, which had been facing continuous low-price competition with Chinese enterprises. In September 2024, LG Display decided to sell its 8.5-generation LCD plant in Guangzhou, China, to China Star Optoelectronics Technology (CSOT). The approximately 2 trillion won in funds secured through this transaction were reinvested into medium-sized OLEDs. Earlier this year, the company announced that it would also hand over its automotive LCD plant operated in Nanjing, China, to a Chinese firm.
There were also innovations aimed at cost reduction. At the end of 2024, the company set out to advance its processes by introducing an AI (artificial intelligence) production system to its OLED manufacturing. OLEDs are produced through more than 140 processes, and the AI collects real-time data to analyze the causes of anomalies and derive solutions. At the time of introduction, the company anticipated cost reduction effects exceeding 200 billion won annually.
As the OLED-focused strategy hit the mark, the company successfully transitioned to an operating profit surplus starting last year. The proportion of OLEDs in total revenue recorded a historic high of 61% last year. The OLED revenue share, which stood at 32% in 2020, steadily increased to 40% in 2022 and 55% in 2024. The company maintained a 60% share in the first quarter of this year as well. With the growing proportion of high-value-added OLED products, the selling price per area in the first quarter also rose by 55% compared to the same period last year.
Analysts note that the company has constructed a product lineup centered on high-value-added products across the board, from large to small and medium-sized panels. The small-sized business is generating stable results based on strengthened technological prowess across technology, production, and overall operations. The medium-sized business has also focused its activities on further advancing its high-end customer structure and actively scaling down low-profit products.
The large-sized business, known to have successfully turned a profit last year, solidified its internal stability by securing a stable revenue structure as global high-end set manufacturers continuously strengthened their OLED TV lineups. In particular, demand is expected to increase further as high-end gaming monitor products rapidly transition from LCD to OLED.
The company is also continuously preparing next-generation growth engines. It has decided to invest 1.1 trillion won to upgrade the small and medium-sized OLED lines at its Paju plant. The strategy is to find an appropriate balance point between preparing for future growth and securing financial soundness.
The securities industry has also been issuing favorable forecasts early on. Analysts suggest that if this trend continues, an annual operating profit exceeding 1 trillion won is possible. Achieving a trillion-won operating profit would mark the first such accomplishment in five years since recording 2.2306 trillion won in 2021.
Forecasts indicate that the company will maintain its competitive edge centered on large-sized OLEDs in the upcoming second quarter. An increase in TV demand has been confirmed ahead of the FIFA World Cup in North and Central America.
“Excluding one-off costs related to the recent voluntary retirement program, a real operating profit of around 152 billion won is expected in the second quarter, driven by profitability improvements centered on large-sized OLEDs,” stated Jeong Won-seok, a researcher at iM Securities. He added, “Considering the shipment of iPhone 18 OLED panels in the second half of the year, it is estimated that the operating profit will record 1.4 trillion won.”
Jang Jeong-hun, a researcher at Samsung Securities, also noted, “Mobile panel shipments performed well despite unfavorable conditions caused by the seasonal off-peak period in the first quarter and the base effect from the termination of the LCD TV business.” He further revealed, “An increase in panel shipments is expected in the second half of the year due to the company’s status as a stable supplier within the high-priced segment for global clients.”
Kim Eun-jin
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