[Click eStock] "LG Display, Earnings Decline Inevitable Due to COVID-19 Impact"

[Asia Economy Reporter Eunmo Koo] Korea Investment & Securities has downgraded LG Display's performance for this year, considering the operational delays of the organic light-emitting diode (OLED) line in Guangzhou, China, caused by the impact of the novel coronavirus disease (COVID-19).

Researcher Jongwoo Yoo of Korea Investment & Securities revised LG Display's performance outlook for this year in a report on the 23rd. The revision reflects the operational delays of the Guangzhou OLED line due to the spread of COVID-19 and the negative impact on overall TV demand. Sales are expected to decrease by 5.5% from the previous estimate of 25.4 trillion KRW to 24 trillion KRW, and operating profit is projected to shift from a 304.1 billion KRW surplus to an 183 billion KRW deficit, continuing the losses from last year into this year. Yoo noted the possibility that the operational delay at the Guangzhou OLED factory could be extended as COVID-19 spreads. The forecast for OLED TV panel shipments this year was lowered by 14%, from 6.1 million units to 5.2 million units.

Global demand for liquid crystal display (LCD) TVs, initially expected to increase by 0.8% this year, is now projected to decline by 3.6% compared to the previous year. Researcher Yoo stated, "TV demand is expected to weaken in regions such as China, Europe, and the United States in the first half of the year," and forecasted "an 8.5% decrease in TV demand in the first half compared to the previous year, and a 2.0% decrease in the second half." He added, "There is almost no impact of COVID-19 on LCD TV panel demand until the first quarter, but TV demand weakness will be reflected from the second quarter," and predicted "global LCD TV shipments in the second quarter will decrease by 10% year-on-year and 13% quarter-on-quarter."

As COVID-19 spreads, the mass production start of the Guangzhou OLED line is highly likely to be further delayed. Researcher Yoo explained, "Unlike in February, preparations for factory operation are possible now, but due to the spread of COVID-19 in advanced countries, uncertainty about OLED TV demand is increasing, so there is no reason to rush production." Due to the delay in factory operation, the original plan for OLED TV panel shipments this year has been downgraded, and the performance outlook for the OLED TV panel business has also been revised downward. The annual operating profit for OLED TV panels was lowered by 63%, from 302 billion KRW to 112.3 billion KRW.

This content was produced with the assistance of AI translation services.