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LG Display 1Q16 results ?3

04:25 27-Apr-16


LG Display has reported results for the first quarter:
The conference call indicated that this was a predictably difficult quarter and that LCD screen prices are expected to stabilize going forward.  Management guided for mid single-digit volume growth in the current quarter with improved profitability, but currency rates are expected to have a negative impact.

Many analyst questions focused on the weakness from Apple, while Chinese demand increased.  I note that LGD's total production capacity was down to 11.7M square meters, from 12.3 and 12.1M in the first and second halves of 2015, as the company continues to shift manufacturing towards larger screens, premium products and newer technology. In particular the P5 flexible mobile screen fab will be fully expanded next year, and the P10 television fab will be complete by the beginning of 2018. Management nows says that both segments are now "equally important", despite the technology lead with TVs but development will be dependent on customer demand.  Reading between the lines, it sounds like negotiations with Apple for mobile AMOLED supply are ongoing.  In addition, the Korean government has stated that it will increase support for the nation's AMOLED industry next year.  Perhaps this is why there are continuing Korean reports on Samsung following suit in TVs.

Q&A also revealed that the AMOLED TV business is still in the red for LGD, though management expects it to shift to profitability over the course of the next year or so.Just under 200K units were shipped the in first quarter, but again, average screen size increased.  Unfortunately, management dodged an ASP question, so no projection for UDC is possible so far.  UHD yields are also improving, which supports LGD's increased profitability claim without any increased cost.