LG expects to start producing plastic OLED this year

Saved itself from angry shareholders

LG Display saved itself from the wrath of Wall Street for its lack-lustre performance by announcing that it will begin making plastic organic light-emitting diode panels at a new line in South Korea in the third quarter.

LG expects to start producing plastic OLED panels at a line in Paju, which lies to the north of Seoul, in the third quarter of 2018, it said on an earnings call on Tuesday, helping offset disappointment over the company’s dismal quarterly performance.

Operating profit in the fourth quarter of 2017 slumped 95 percent to its lowest in about two years, thanks to slumping iPhone sales, falling LCD panel prices, large OLED investment and an unfavorable exchange rate.

LG shares fell as much as two percent but later rose 6.2 percent to a four-month high after comments on the timeline for plastic OLED.

The South Korean firm did not provide any OLED panels for Apple’s iPhone X in 2017 and said in December that nothing had been decided about future supply for Apple.

Analysts think that LG Display has got a handle on its OLED turnaround and surer of itself. The company is planning to shift all its business to OLED by 2020.

LG’s operating profit for the quarter ended last month was the lowest since April-June 2016 and was short of what Wall Street expected.

Results were hit as LCD TV panel prices which fell 20-40 percent last year after previous price hikes curbed demand for large-size TVs, said WitsView, part of research provider TrendForce.

LG expected panel shipments during the current quarter to fall by a high-single digit percentage due to lower seasonal demand but added that panel prices would likely stabilise at the end of the period.

“Although short-term earnings might be impacted by LCD panel prices, the share price will be driven by the firm’s progress in the OLED business”, said Park Sung-soon, an analyst at Baro Investment & Securities.