South Korea’s LG Display Co Ltd on Wednesday said January-March profit hit the highest in at least five years, buoyed by brisk sales of new smartphones by client Apple Inc and healthy television panel demand.
LG Display previously said profit for the seasonally weak first quarter was likely to decline sequentially, but analysts expected strong earnings due to sales to client Apple. Analysts also saw depreciation in the South Korean won against the U.S. dollar as a catalyst.
LG Display cited stable TV panel demand as well as cost reduction as key factors for its first quarter results.
Apple’s new iPhones were widely expected to sell well, boosting earnings at the panel maker which is also reportedly the exclusive supplier of screens for the Apple Watch, on sale from this week.
But data from researcher DisplaySearch showed that market prices of panels for devices such as TVs, laptops and monitors as of April 20 were broadly weaker than prices of April 7. This pushed LG Display shares to a near two-week low on Tuesday.
Some investors and analysts worry that weak economic growth in Western Europe and currency depreciation in emerging markets such as Brazil and Russia will hurt profitability at TV makers. Samsung Electronics Co Ltd and LG Electronics Inc, the world’s No. 1 and No.2 TV makers, have already warned of growing headwind.
“Though panel prices are kept to a certain level, brand vendors have revised their shipments downwards and may later face inventory pressure,” researcher TrendForce said about the TV market. “Therefore, the second quarter outlook after the month of May is more worrisome than upbeat.”
LG Display reported 744 billion won ($689.73 million) in operating profit for the first quarter, compared with a 490 billion won mean estimate by 32 analysts in a Thomson Reuters I/B/E/S survey.
This is the company’s strongest result going back to the first quarter of 2011, the earliest period for which LG Display’s current accounting standards apply.
LG Display said April-June panel shipments will likely rise by a low-to-mid single digit percentage rate in sequential terms but said selling price trends will vary based on the market and product segment. Sister company LG Electronics will launch its new flagship G4 smartphone in the current quarter, which could help boost panel sales.
Shares of LG Display ended unchanged on Wednesday, compared with a 0.04 percent fall for the broader market.