x Abu Dhabi, UAE Thursday 20 July 2017

Korean supplier of iPhone and iPad screens says shipments to decline

LG Display, a major supplier of iPad and iPhone screens, said its LCD panel shipments would slide this quarter, underscoring worries about weaker growth for Apple products, and taking the shine off forecast-trouncing results.

LG Display, a major supplier of iPad and iPhone screens, said its LCD panel shipments would slide this quarter, underscoring worries about weaker growth for Apple products, and taking the shine off forecast-trouncing results.

Fears that demand for the iPhone and the iPad could be slowing have been triggered by news of possible production cutbacks by some component suppliers in Asia and were exacerbated after Apple reported weaker-than-expected iPhone sales in its quarterly earnings.

The South Korean company said some clients were cutting orders and it expect LCD panel shipments to decline by around 15 per cent in the first quarter from the previous quarter.

It provides about 70 per cent of iPad screens, according to research firm DisplaySearch.

"Some customers are adjusting their inventory and that will affect our panel shipments," the chief financial officer James Jeong told an analyst briefing.

"Along with overall weakness in demand due to a seasonal slowdown, we expect our panel shipments will decline by more than 10 per cent and reduce first-quarter earnings."

Sales of tablet and smartphone panels, which are largely bought by Apple, accounted for 31 per cent of LG Display's total screen shipments in the fourth quarter. Mr Jeong said that will fall to around 25 per cent in the first quarter but added that it will rise back to about 30 per cent for the whole year.

A source close to LG Display also played down the risk of a very sharp decline.

"Market concerns that (Apple) orders will tumble dramatically are somewhat overdone," said the source, referring to a CLSA forecast this week that LG's iPad panel shipments could fall six-fold to 2 million in the current quarter. He declined to be identified as he is not allowed talk about Apple.

"As Apple results showed today, iPad demand is much stronger than many had worried about and that'll be reflected in suppliers' first-quarter results."

Hit by growing worries about demand for Apple products, LG Display's shares have lost about 17 per cent since December after gaining 40 per cent in the first 11 months of 2012. Prior to the results, they closed down 1.2 per cent, underperforming a 0.8 per cent decline in the broader market.

A first-quarter fall in profits will come, however, after a very strong fourth quarter that saw LG Display book 587 billion Korean won in operating profit, one-third higher than the market consensus and up from an operating loss of 155bn won for the same period a year earlier.

Helped by a rebound in TV sales as well as solid iPhone sales, the results also mark its highest quarterly profit since the second quarter of 2010 and a continuation of a turnaround that began in July-September after seven straight quarters of losses, mainly due to an industry oversupply of TV panels.

 

* Reuters