South Korean flat-screen maker LG Display Co Ltd reported a loss for the third quarter, the company’s second consecutive quarterly loss. The company also reported that it cut its budget as the macroeconomic challenges and rising inflation affected the demand for TVs and smartphones, and its business.
The company noted that tech gadget makers made huge cuts to their inventory in Europe, which is an important sales region for organic light-emitting diode (OLED) TVs. The company also added the Russia-Ukraine war and energy crunch also affected its business.
The company reported an operating loss of 759 billion won or $532.31 million for the third quarter compared to a profit of 529 billion won from the year-ago period. LG Display missed the average forecast of a 472 billion won loss from an analysts’ poll collated by Refinitive Smart Estimate.
In its regulatory filing, the company said that revenue declined 6 percent to 6.8 trillion won. It also announced plans to cut its 2022 investment budget by more than 1 trillion won and flexibly operate its OLED production lines to match demand.
The company said that it expects the sluggish demand for liquid crystal display (LCD) and OLED panels which affected shipments during the third quarter, to continue up to the second half of 2023.
The prices of 55-inch LCD panels for TV sets dropped 13 percent in the third quarter compared to the previous quarter, according to data from WitsView. According to Jeff Kim, an analyst at KB Securities, LCD panels stabilized in October as a result of production adjustments by panel makers. He, however, added that LG Display is expected to extend losses into the current quarter because of weak demand.
In July, the company announced that it would stop the production of LCD TVs in South Korea by 2023. “Under the conservative stance that poor management performance may be prolonged…we will accelerate our exit from the LCD TV sector,” LG Display Chief Financial Officer Sunghyun Kim told analysts on Wednesday, without providing an updated timeline. According to a spokesperson, the company generated about 9 percent of its revenue from LCD TVs.
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