LG Display reports 774-billion-won third-quarter net loss
LG Display reported widening losses in the third quarter — its second consecutive quarter in the red — on slowing demand for key panel products and falling prices.
The panel maker, 37.9 percent owned by LG Electronics, posted a third-quarter net loss of 774 billion won ($542.7 million) in a regulatory filing, swinging from a profit of 463.8 billion won a year earlier.
The company said it posted an operating loss of 759.3 billion won for the July-September period, compared with an operating profit of 529.3 billion won a year ago. Sales fell 6.3 percent to 6.77 trillion won.
The operating loss was 27.3 percent higher than the average estimate, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Demand has been waning at an “unprecedented level” both for liquid-crystal display (LCD) and premium organic light-emitting diode (OLED) panels, the company said, as most countries have lifted pandemic restrictions, and people spend less at home and on personal IT devices.
Enterprise demand has also been slow due to the hostile macro environment, it added.
Sales IT product panels was 45 percent of total sales, and TV panels 25 percent, according to the company.
Demand for OLED TVs has slowed in Europe, which takes 45 percent of the company’s total OLED sales, because of ongoing geopolitical tension, the company said.
According to TrendForce, global TV shipments for the three months ending in September reached 51.39 million units, falling 2.1 percent on year.
TV shipments in the fourth quarter are expected to grow by 10.8 percent quarter-on-quarter to 56.96 million units but still down 3.5 percent from the year earlier period, it said.
This year’s OLED TV shipments are estimated to only reach 6.67 million units, down 0.6 percent from the year-earlier period.
Warning of tougher times ahead, LG Display said, “The challenging business environment is expected to continue into next year” as it faces heightened risks from a looming economic downturn, diminishing demand caused by weaker consumer confidence and client efforts to minimize inventory.
“The company will realign its strategic tasks in line with the changing environment and speed up its execution to position ourselves for another leap forward,” it said.
LG Display said it will continue to scale down its loss-making LCD TV business, with a goal of discontinuing domestic production of LCD TV panels as early as possible. It also said it will reduce production in China in a phased manner.
It also plans to expand its high-value make-to-order businesses to minimize market volatility.
“We will make full-fledged efforts to improve our financial structure as quickly as possible by minimizing investments and operating expenses while strengthening inventory management and implementing bold, flexible strategies in conjunction with the current business outlook,” said Kim Sung-hyun, chief financial officer and senior vice president at LG Display.
Kim Dong-won, an analyst from KB Securities, forecast a dismal outlook for the company in the fourth quarter, citing sluggish demand, even though prices of LCD panels stopped their decline this month, with panel makers actively moderating their supply. He projected LG Display to record a deficit for the year, with an operating loss of 1.3 trillion won.
LG Display shares fell 1.12 percent to close at 13,250 won Wednesday.
BY PARK EUN-JEE, YONHAP [park.eunjee@Joongang.co.kr]