LGD Q3 Operating Loss of 759.3 Billion Won... "Overcoming Through High-Value-Added Business Restructuring"

Focus on the mid-sized and premium TV panel markets, strong areas facing sharp decline in panel demand and price drops in the second half of the year

[Asia Economy Reporter Kim Pyeonghwa] LG Display recorded an operating loss in the third quarter, following the second quarter of this year. This result is due to the prolonged weak demand in the upstream industries amid the worsening macroeconomic conditions. LG Display plans to accelerate the restructuring of its business structure focusing on high value-added products such as organic light-emitting diode (OLED) and high-end LCD.

LG Display announced on the 26th that its sales in the third quarter of this year amounted to KRW 6.7714 trillion, down 6% compared to the same period last year. Operating profit recorded a negative growth as in the previous quarter, resulting in a loss of KRW 759.3 billion. The net loss for the third quarter was KRW 774 billion, and EBITDA (earnings before interest, taxes, depreciation, and amortization) was KRW 391.2 billion (profit margin 6%).

The sales proportion by product (based on revenue) was 25% for TV panels, 45% for IT panels (monitors, notebook PCs, tablets, etc.), and 30% for mobile panels and other products.

LG Display recorded such a performance deterioration as panel demand decreased more sharply than expected due to a decline in real demand caused by the rapid deterioration of the macroeconomy in the third quarter, along with inventory reduction and stricter standards by set manufacturers.

In particular, LG Display explained that the unprecedented sharp decline in panel demand and price drops in the second half in the mid-sized and premium TV panel markets affected the performance. The fact that LCD panel prices fell significantly below historical lows also impacted the results.

LG Display plans to accelerate business restructuring centered on 'OLED and high-end LCD' and 'order-based business' in response to macroeconomic volatility and prolonged weak demand in upstream industries. It will focus its capabilities on strengthening financial soundness.

LG Display stated, "In the large-size business sector, we plan to pursue qualitative growth and establish a foundation for securing profitability through product advancement and operational efficiency," adding, "We will expand differentiated products based on customer value such as ultra-large OLED panels over 65 inches and gaming OLEDs, and further strengthen cost competitiveness."

The plan to end domestic production in the LCD TV sector, where there is little room for competitive differentiation and excessive performance volatility due to market conditions, will be expedited. Production in China will also be gradually reduced.

In the mid-sized business sector, LG Display plans to reduce business volatility by strengthening differentiated competitiveness centered on high-end LCD products. Preparations will continue to secure the mid-sized OLED market, including tablet PCs and WOLED-based monitors, and to strengthen technological leadership.

In the small and automotive business sectors, supply of new smartphone models has started, and the company plans to strengthen business capabilities focusing on high-end products in the future. LG Display explained that it aims to expand the gap and further strengthen its position in the smartwatch and automotive (Auto) display markets, which are continuously growing based on differentiated lineups and solutions.

Kim Seonghyun, LG Display’s Chief Financial Officer (CFO), said, “We will accelerate adjustments to marginal businesses, minimize investments and operating costs other than essential recurring investments, strengthen inventory management, and implement bold and flexible operational strategies linked to market conditions to quickly improve the financial structure.”

He added, “In preparation for the possibility that the current market downturn may prolong or worsen, we will make strong efforts to improve performance by accelerating business restructuring and strengthening the customer base for each business sector.”

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