LGD Reports 1.0984 Trillion KRW Loss in Q1... "Expecting Profit Turnaround in Second Half" (Comprehensive)

Record Quarterly Operating Loss
Expecting Profit Turnaround in Second Half with Expansion of Order-Based Business

LG Display posted an operating loss exceeding 1 trillion KRW in the first quarter of this year, marking the largest deficit in its history. This was due to weak demand for TVs and IT products combined with the seasonal off-peak period. However, as inventory clearance is entering its final stage and the company is increasing the proportion of order-based businesses that can secure stable profitability, expectations have grown that the first half of the year will mark the bottom in performance and a return to profitability is possible in the second half.

On the 26th, LG Display announced sales of 4.4111 trillion KRW and an operating loss of 1.0984 trillion KRW. Sales decreased by 40% compared to the previous quarter and by 32% compared to the same period last year. Operating profit turned to a loss in the first quarter of this year from a profit of 38.3 billion KRW in the first quarter of last year. Compared to the operating loss of 875.7 billion KRW in the fourth quarter of last year, the deficit widened by about 200 billion KRW.

Weak demand centered on TV and IT products and intense inventory adjustments in the upstream industry continued from the fourth quarter of last year into the first quarter of this year. Moreover, due to the seasonal off-peak effect, product shipments and sales declined. The reduction of the LCD TV business for business structure advancement also impacted sales. Net loss for the period was 1.1531 trillion KRW, and EBITDA (earnings before interest, taxes, depreciation, and amortization) recorded a loss of 80.2 billion KRW.

[Image source=Yonhap News]

LG Display is promoting the advancement of its business structure centered on ‘order-based businesses’ that can secure stable profitability through close collaboration with customers. In fact, the proportion of order-based business in total company sales expanded from 30% at the end of last year to the low 40% range in the first quarter of this year. The company expects this to reach around 70% within the next 2 to 3 years. While expanding shipments of high value-added mobile products scheduled for additional mass production this year, it is also increasing orders for automotive displays. The medium-sized OLED sector, including tablet OLEDs currently under investment, is expected to be capable of mass production and supply in 2024.

Additionally, the supply-demand business, which is highly affected by market volatility, is focusing on high value-added areas. For large OLEDs, LG Display plans to continuously strengthen its position in the premium TV market by expanding its lineup of differentiated products with fundamental competitiveness such as luminance and power consumption, along with cost innovation. The company is also accelerating efforts to promote emerging market-creating businesses such as transparent and gaming OLEDs.

Meanwhile, LG Display’s first-quarter sales composition by product (based on sales) was 19% for TV panels, 38% for IT panels (monitors, notebook PCs, tablets, etc.), 32% for mobile panels and other products, and 11% for automotive panels. Kim Sung-hyun, LG Display’s CFO (Chief Financial Officer), said, “While weak sales in the upstream industry continue, the situation where panel demand lags behind set sales is expected to persist for the time being. However, with the recovery of inventory health across the industry ecosystem leading to increased panel purchase demand and the expansion of order-based business results such as increased mobile product shipments, we expect the first half to be the bottom and a return to profitability from the second half.” He emphasized, “Although macroeconomic uncertainties remain high, we will accelerate the advancement of our business structure and continue to implement high-intensity cost reduction activities as planned to improve performance.”

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