LG Display to swing back to profit next year: Analysts

South Korean display maker LG Display is expected to emerge from the red next year as the company speeds up efforts to reorganize its business structure to focus on high-value-added organic light-emitting diode panels, market analysts said Thursday.

LG Display has been experiencing consecutive yearly deficits, logging operating losses of 2.5 trillion won ($1.9 billion) and 2.08 trillion won in 2023 and 2022, respectively. This year, the losses will continue, but the company should be able to reduce them, analysts said.

Looking at quarterly earnings, the display maker logged operating losses of 469.4 billion won and 93.7 billion won in the first and second quarters, respectively.

In the July-September period, the display maker is expected to narrow its operating losses to 6.1 billion won, according to the market consensus reported by FnGuide, a market intelligence firm. For the final quarter, the company is projected to mark a turnaround to achieve an operating profit of 366.7 billion won, with shipments of mobile OLED panels expected to increase.

"In the third quarter, the company's earnings will be affected by the unfavorable won-dollar exchange rate and one-off payments," Chang Jung-hoon, a senior analyst at Samsung Securities, said. One-off payments include the company's spending on its voluntary retirement allowance program.

In terms of yearly performance, Chang forecast the company to post sales of 27.5 trillion won and an operating loss of 36 billion won.

LG Display's latest efforts to shift its core business to advanced OLED panels will improve its performance next year, analysts predicted.

Last month, the display maker sold its liquid-crystal display panel and module factories in Guangzhou, China, to China Star Optoelectronics Technology for 2 trillion won ($1.5 billion). CSOT is a subsidiary of Chinese tech giant TCL Group.

“We are reorganizing our business structure by selling off our stakes in large LCD production facilities,” LG Display said. The display maker said the deal is expected to be completed by March 31, 2025.

In May, LG Display sold land and a building in Paju, Gyeonggi Province to LG Uplus for 105.3 billion won.

The fresh flow of cash is expected to improve the company's financial solvency and allow it to ramp up investment in OLED panel production, said Kim So-won, an analyst at Kiwoom Securities.

"The company has improved its financial solvency by securing cash from selling the LCD facilities in China," Kim said. "The shift to an OLED-centric business model will strengthen the company's profitability."

Supporting LG Display's anticipated turnaround next year will be Apple’s adoption of Low-Temperature Polycrystalline Oxide OLED displays in its upcoming iPhone 17 models, experts say.

The LTPO panels are the more expensive OLED screens that support 120 hertz refresh rates, which consume less power. They are reportedly about 40 percent more expensive than the less advanced Low-Temperature Polycrystalline Silicon panels. LG Display and Samsung Display are Apple's sole suppliers of the LTPO displays.

Apple has been using the LTPO panels for its advanced iPhone Pro and iPhone Pro Max models, while using the cheaper LTPS panels for regular iPhone models.

For the iPhone 17 series, Apple is likely to use the LTPO panels for the regular models to enable smoother and more fluid screen transitions, Display Supply Chain Consultant Ross Young said.

According to DSCC, LTPO panels accounted for 10 percent of the smartphone market in 2021, a share that is expected to grow to over 40 percent in 2025.