By Kim Yoo-chul
LG Display’s operating profit during the first quarter was its biggest in five years.
The world's biggest display panel maker said Wednesday its January-March operating profit was up nearly seven times from a year earlier to 744 billion won.
A year ago, the LG Group's display affiliate reported 94.3 billion won in profit and a 626 billion won profit in the fourth quarter of last year.
Net profit came in at 475.8 billion won, while its quarterly sales remained 7.02 trillion won, up 26 percent from a year earlier.
“The operating profit margin was above 10 percent. LG Display has reported historically high quarterly sales,” Jacquelyn Park, a spokeswoman at the company said.
Park said such huge earnings were thanks to healthy large-sized TV panel sales since late last year and continued cost-cutting efforts.
By breakdown of the portion of its main products, TV panels accounted for 41 percent, followed by mobile panels and tablet panels with 25 percent and 17 percent.
LG said the second quarter would be much better than the first in terms of sales and profit as demand for panels used in smartphones, TVs and other mobile devices would be strong ahead of big shopping and holiday seasons in its key markets such as the United States.
LG Display is owned by LG Electronics, but LG Display's main sales come from sales of its panels to major Chinese TV producers from Konka to SkyWorth and Apple.
Market analysts were surprised to see the earnings report as earlier market consensus for LG Display in the first quarter was around 590 billion won in terms of operating profit.
"With stronger fundamentals, LG Display's annual operating profit will reach 1.7 trillion won, beating market expectations," Lee Ka-keun at IBK Securities said, adding increased panel orders by Apple for its smart watches would significantly help LG boost sales and profits.
LG Display is the primary panel supplier to Apple, meaning that LG's profit curve is subject to the popularity of i-devices such as iPhones, iPads and MacBook Air.
The Apple iPhone 6 and 6 Plus have been selling like hot-cakes since the devices' launch in October last year.
But Hwang Min-sung, from Samsung Securities, said lackluster demand for TVs and weak TV price moves amid consumers' late response to switch to new ones such as OLED and quantum dot TVs might limit the company’s sales this year.
LG Display is also the leader in OLED displays. It recently formed an alliance with major TV makers in China and Japan to promote OLED panels. Still, OLED TVs are yet to take off as the TV industry itself is in decline.