SEOUL (Reuters) – LG Display Co Ltd reported its smallest profit since it returned to the black in the second quarter of last year, as demand for iPhone and iPad screens from Apple weakened amid concerns the U.S. company is losing its luster in the mobile device market.
Apple Inc, which analysts say provides about 30 per cent of LG Display’s revenue, is facing intensifying competition from Samsung and up-and-coming rivals. A disappointing forecast by a U.S. supplier to Apple last week heightened fears about slowing demand for the iPhone and iPad, pushing shares of Asian suppliers including LG Display sharply lower.
LG Display, which vies with Samsung Electronics Co Ltd’s panel unit for the top position in LCD flat screens globally, made 151 billion won ($135 million) in operating profit in its January-March first quarter. That compared with the average forecast of a 147 billion won profit in a Thomson Reuters poll of analysts.
It was the South Korean company’s fourth straight quarterly profit after seven straight quarters of losses, as makers of liquid crystal display panels have since curtailed output after about two years of oversupply.
The result was also a sharp improvement from a loss of 211 billion won a year earlier. But it was down 74 per cent from the previous quarter, hurt by a seasonal slowdown in demand and by weaker sales to Apple, which is scheduled to report quarterly results on Tuesday.
Sales of tablet and smartphone panels, which are largely bought by Apple, accounted for 27 per cent of LG Display’s total screen shipments in the first quarter, down from 31 per cent in the fourth quarter.
Jay Yoo, an analyst at Korea Investment & Securities, estimated before the results announcement that LG Display’s panel shipments for the iPhone 5 and the latest iPad had fallen 42 per cent and 66 per cent, respectively, from the prior quarter as Apple struggles with slowing sales growth.
On Tuesday, Apple is expected to report just an 8 per cent increase in revenue for its fiscal second quarter, among the weakest showings in years, according to analysts’ estimates.
Still, analysts see earnings for LG Display improving in the coming quarters as Apple is expected to introduce upgraded products later this year, and as demand for mobile device screens from affiliate LG Electronics Inc increases.
Samsung Securities analyst Harrison Cho expects Apple to introduce a less costly iPhone around July, helping LG Display improve its sales to Apple from June when initial parts shipments are expected to begin.
LG Display said on Monday that it expects panel shipments will rise by 5 per cent to 10 per cent in the second quarter from the previous quarter.
Shares in LG Display have fallen about 3 per cent in the year to date, compared with a roughly 5 per cent drop in the benchmark KOSPI index. The stock closed 2.2 per cent higher prior to the results announcement.
(Reporting by Miyoung Kim; Editing by Chris Gallagher)
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