Exclusive LG Display pledges to boost shareholder value
CFO expects OLED TVs to turn profitable in a few years
By Kim Yoo-chul
Kim Sang-don, LG Display CFO, speaks during an interview at his office in Seoul, Wednesday. / Korea Times
LG Display plans to increase shareholder returns as the world's biggest display panel manufacturer is upbeat about its business outlook throughout this year, its chief financial officer (CFO) said.
“Our stock is quite undervalued given our strong position in the global display industry and diversified business portfolio. I know investors are cheering us up. We plan to take steps to boost shareholder returns this year,” CFO Kim Sang-don said at an interview, Wednesday.
LG Display shares closed unchanged at 29,300 won, Wednesday.
The senior vice president also said it has identified taking investor-friendly action as its top priority. But he fell short of disclosing details on such steps, including dividends.
He said the company has no plan to buy back its own shares to boost its share prices.
“I believe steady investment for technology leadership is the best way to boost our corporate value,” the CFO said.
Kim said the global display industry is being rationalized by a few major players due to the high cost and technological barriers. He expects LG Display to benefit most from the industry consolidation in terms of sales and market share.
“This year will be positive. Analysts expect operating profit in the second quarter to reach between the 400 billion won and 500 billion won level. LG Display has no problem meeting the consensus,” the executive said.
The company, an affiliate of LG Electronics, reported 744 billion won in operating profit for the first quarter, the strongest since the first quarter of 2011 when its current accounting standards were applied.
He said business conditions are improving in the second quarter, ruling out the possibility of supply glut.
“Worries about oversupply are overblown. Demand for displays for TVs and other devices is solid and the impact of capacity expansion will be limited with LG Display's products getting favorable response from its target clients in key markets,” he said.
He said there won't be a severe supply and demand mismatch this year. “This is another positive factor for us to stabilize our financial soundness,” the CFO said.
Based on such market analysis, this year's investment for facilities will be similar to last year, he said.
LG Display supplies panels for TVs, mobile phones, tablets and monitors for PCs to global technology firms such as Hewlett-Packard, Dell, Apple and TV firms in China.
The CFO said its organic light-emitting diode (OLED) display panel business will turn profitable in a few years as the firm is on track to invite major TV manufacturers to join its “OLED Alliance” camp.
“If we see more demand for OLED TVs, then yes, we will invest more. LG Display isn't hesitant to generate short-term profits as the key question is how to get bargaining power in the OLED display industry.”
He said the next two and three years is crucial for the company to gauge the profitability of its OLED business.
He said the company has succeeded in reducing costs to produce more price-competitive OLED displays thanks to the addition of new materials.
“For the OLED business, this year will be better than the previous year and next year will also even better again. Issues over royalties with its clients were addressed. We are in the process of creating a new ecosystem in OLEDs.”
“Some say OLED is just an upgraded version of conventional liquid crystal display (LCD) panels; however, OLED display is a totally new business as this display can be used in things within the Internet of Things (IoT) framework. LG Display is teaming up with it clients to develop next-generation displays such as glasses-free 3Ds. OLED displays are crucial in the IoT era,” the CFO said.