LG Display falls to net loss in Q3 on falling LCD prices
Seoul, Oct 24 (IANS) South Korean display maker LG Display Co. has said that it registered a net loss in the third quarter (Q3) due to the low liquid crystal display (LCD) panel prices and weak global demand.
LG Display logged 442.2 billion won ($377.1 million) in net loss for the July-September period, compared with 17.5 billion won of profit a year earlier, the firm said in a regulatory filing.
The company booked 436.7 billion won in operating losses and sales fell 5 per cent on-year to 5.8 trillion won in the Q3, the company said, according to a Yonhap news agency report on Wednesday.
LG Display attributed its net loss to “steeper-than-expected” LCD TV panel prices and increased investment in new OLED factories over the period.
The ratio of TV panels fell by 9 percentage points to 32 per cent in Q3 on an output cut in LCD panels, while mobile panels gained 9 per cent points to 28 per cent over the period on strong demand for OLED panels for smartphones, the firm said.
The average price of the 50-inch LCDs for TVs fell to $94 in August, down 13 per cent from three months ago, according to market researcher WitsView.
The quarterly deficit also comes as the panel maker has been expanding investment in organic light-emitting diode (OLED) panels to shift from the traditional LCD panels that have been plagued by falling demand and a supply glut, partly from Chinese producers.
The company said it has been realigning its overall business strategy “from a zero base” under new CEO Jeong Ho-young, who took office last month, to respond to the fast-changing business environment.
As part of the efforts, the firm said, it plans to streamline its large LCD TV panel production to cut mounting losses and focus on more profitable products, including OLED panels and a specialized LCD lineup.
“We will downsize LCD TV panels, while developing differentiated LCD products in the IT, commercial and auto sectors,” Seo Dong-hee, the firm's chief financial officer, said in a conference call.
“The company will speed up the transition to large OLED panels and ramp up production in plastic OLED display for smartphones.”
The company added that it will continue to cut LCD TV panel output and expand plastic OLED production in the fourth quarter, expecting worsening profits due to LCD supply glut and one-off costs from restructuring efforts.
To speed up the transition, the company's OLED factory in China started operations in August to roll out 60,000 OLED sheets per month. It increases its total monthly OLED sheet output capacity to 130,000 units this year when combined with a South Korean production line.
The panel maker said that it plans to ramp up its annual production at the two factories to over a combined 10 million by 2022.
Shares of LG Display shed 2.07 per cent to 14,200 won on the Seoul bourse on Wednesday, below the KOSPI's 0.39 per cent fall. The earnings report was released after market hours.