LGD Reduces Losses in Q3... Expecting Profit in Q4 (Comprehensive)

Q3 Deficit Narrowed Thanks to Cost Reduction Efforts

LG Display, which posted nearly 2 trillion KRW in operating losses in the first half of this year, is gradually reducing its loss margin as the second half progresses. At the current pace, there is strong optimism that the company could return to profitability in the fourth quarter.

On the 25th, LG Display announced its third-quarter business results, reporting sales of 4.7853 trillion KRW and an operating loss of 662.1 billion KRW. Although sales decreased by 29.33% compared to the third quarter of last year, the deficit was reduced by 12.80%. LG Display recorded an operating loss of 759.3 billion KRW in the third quarter of last year. Compared to the second quarter of this year, sales increased by 0.99%, and the loss margin decreased by 24.89%.

[Image source=Yonhap News]

The focus on advancing the business structure, along with continuous efforts in cost innovation and operational efficiency, contributed to the reduction in losses compared to the previous quarter and the same period last year.

During the conference call following the earnings announcement, LG Display stated, "We are putting effort into cost innovation amid a challenging market environment," adding, "If the market conditions improve, these cost-cutting efforts will positively impact the company." They also said, "We will continuously strengthen our core businesses in line with market demand and business environment, and strive to improve profitability through company-wide ongoing cost innovation."

In the third quarter of this year, LG Display's sales composition by product was 23% for TV panels, 40% for IT panels (monitors, notebook PCs, tablets, etc.), 28% for mobile panels and other products, and 9% for automotive panels. The share of OLED in total display sales reached 42%, up 2 percentage points from 40% in the third quarter of last year.

With the peak season for increased TV sales in the fourth quarter, LG Display plans to strengthen its customer portfolio centered on large-sized products in the large OLED segment and continue cost innovation such as reducing material costs for key components. Although there is a growing atmosphere that LCD panel orders may increase due to TV manufacturers’ strategies to diversify their LCD panel supply chains, LG Display intends to maintain its existing strategy of continuously downsizing its LCD TV panel business in line with its business structure advancement direction.

For small and medium-sized OLEDs, the company plans to fully utilize the expanded production capacity to actively increase shipments of mobile products, while further solidifying its technological leadership in IT OLED and preparing for mass production and supply systems next year without delay. In the automotive display sector, LG Display is determined to achieve order and sales growth based on differentiated technological competitiveness encompassing tandem OLED (a technology stacking two or more organic light-emitting layers), high-end LCD, thorough quality control, and stable supply capabilities.

In particular, LG Display expects high growth potential in the automotive display sector. The company forecasts that automotive display sales will account for about 10% of total sales this year, with an expected sales growth rate of around 15% annually over the next five years. It also anticipates that the order backlog for the automotive display segment will be in the low 20 trillion KRW range this year. As the era of electric vehicles advances and the role of displays inside cars diversifies, LG Display explained that a 30% growth in order backlog is expected by 2025. However, the company recognizes the increasing number of competitors entering the promising automotive market as a risk factor.

Meanwhile, LG Display acknowledged that its financial strength has been depleted due to the business characteristics that require continued investment despite the sluggish market conditions, but stated that there are currently no issues with funding. During the conference call, LG Display said, "Among the methods of raising funds, we still adhere to traditional approaches, which helps maintain stability in financing," and "We are smoothly securing funds with relatively long-term and low-interest loans from policy banks and major commercial banks."

Kim Sung-hyun, CFO (Chief Financial Officer) of LG Display, said, "Despite the difficult market environment this year, we are focusing company-wide efforts on business structure advancement and cost innovation to gradually improve profitability," adding, "With the easing of panel inventory adjustments in the upstream industry and the expected increase in shipments of medium-to-large products and new mobile panels to meet year-end peak demand, we anticipate turning profitable in the fourth quarter."

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