LG Display said it plans to cut its investment budget by more than 1 trillion won in 2022 and flexibly operate its OLED production lines to match demand.
Korea-based flat-screen maker LG Display has also revealed its action plan after posting 6 percent drop in revenue to KRW 6,771 billion in Q3 2022 vs KRW 7,223 billion in the third quarter of 2021.
LG Display’s revenues in Q3 2022 increased by 21 percent to KRW 6,771 billion from KRW 5,607 billion in the second quarter of 2022 and decreased by 6 percent from KRW 7,223 billion in the third quarter of 2021.
LG Display reported operating loss of KRW 759 billion in Q3 against the operating loss of KRW 488 billion in Q2 2022 and with the operating profit of KRW 529 billion in Q3 2021.
LG Display registered net loss of KRW 774 billion in Q3, compared with the net loss of KRW 382 billion in the second quarter of 2022 and with the net income of KRW 464 billion in the third quarter of 2021.
LG Display experienced lower panel demand than expected in the third quarter as set makers tightly adjusted and strengthened their inventory policies due to a worsening macroeconomic environment. The decline in set and panel demand, coupled with all-time-low LCD panel prices during the second half of the year, affected the company’s mid-sized panel and premium TV panel businesses, which impacted the company’s performance.
Panels for TVs accounted for 25 percent of the revenues in the first quarter, while panels for IT devices including monitors, laptops, and tablets accounted for 45 percent, and those for mobile devices and the others accounted for 30 percent.
LG Display will step up its efforts to accelerate the reorganization of its business structure, focusing on high-end LCD products and OLED while enforcing a sound financial structure. The company also plans to expand its high-value make-to-order businesses to minimize market volatility.
In its large-sized business, LG Display will push for qualitative growth while securing profitability by improving its product portfolio and management efficiency. LG Display will expand its differentiated products, such as gaming OLED displays and ultra-large OLED panels of 65 inches and higher, while strengthening its cost competitiveness.
LG Display will advance its plan to exit domestic production of LCD TV panels while also gradually reducing production in China.
For its mid-sized business, LG Display will reduce business volatility by strengthening differentiated competitiveness for its high-end LCD products. LG Display plans to preoccupy the mid-sized OLED market, particularly the tablet and WOLED-based monitor sectors, while strengthening its technological leadership in the market.
For the small-sized OLED market, LG Display has begun supplying products for new smartphone models and will further strengthen its business capabilities centered around high-end products. In addition, the company will concentrate on further expanding its position in the ever-growing smartwatch and automotive display markets through differentiated product lineups and solutions.
“We will make efforts to improve financial structure by minimizing investments and operating expenses while strengthening inventory management and implementing bold, flexible strategies in conjunction with the current business outlook,” Sung-hyun Kim, CFO and Senior Vice President at LG Display.
Tech gadget makers made large cuts to inventory and consumer sentiment in Europe – a key sales region for organic light-emitting diode (OLED) TVs – worsened rapidly due to the Russia-Ukraine war and energy crunch, LG Display said.
Prices of 55-inch LCD panels for TV sets fell 13 percent in the third quarter from the preceding quarter, according to data from TrendForce’s WitsView.
LCD panel prices stabilized in October thanks to production adjustment by panel makers, but LG Display is expected to extend losses into the current quarter because of weak demand, said Jeff Kim, an analyst at KB Securities.
The company said in July it would halt LCD TV production in South Korea by next year.