LG Display posts 1st quarterly loss in six years

By Baek Byung-yeul

LG Display recorded its first operating loss in six years due to weak demand for panels, the company announced Wednesday.

The Korean display giant said it recorded an operating loss of 98.3 billion won ($91 million), compared with a profit of 1 trillion won a year earlier.

Revenues in the first quarter fell by 20 percent to 5,675 billion won from 7,062 billion won in the first quarter of 2017 and decreased by 20 percent from 7,126 billion in the fourth quarter of last year.

The company also posted a net loss of 48.9 billion won, compared with a profit of 679 billion won in the first quarter of 2017. It recorded a net income of 44 billion won in the fourth quarter of last year.

LG Display said the weak performance came amid weak demand in panels from low seasonality and decline in panel prices. Also, the LCD panel prices declined more than expected due to set makers' conservative purchasing strategy amid growing expectation of an increase in panel supply from Chinese panel makers.

LCD accounts for about 90 percent of the company's revenue. The company got 43 percent of its revenue from the television segment but Chinese panel makers such as BOE are ramping up productions and continuing to exert their influence on the panel prices.

“The market situation changed at a faster pace beyond expectations,” Kim Sang-don, chief financial officer of LG Display, said in a statement, adding “based on our scenarios, we will be focusing on efficient and flexible management in capital expenditure and maintaining operational performance including intensified cost reduction.”

Kim added the company expects to produce a better result in the second quarter as there will be sports events and rising demand for larger OLED products. “Panel area shipments are expected to grow starting from the second quarter, as the upward trend to larger-size panels continues in time for major sporting events. In addition, demand for large-size OLED panels is expected to remain strong, while LCD panel prices are expected to stabilize during the second quarter.”

The company said it will also keep shifting to an OLED-focused business structure and will focus on differentiated products such as Crystal Sound OLED (CSO) and wallpaper OLED panels.