LGD Q1 Operating Profit Down 92%... "Production and Shipment Hit by Component Supply Issues" (Comprehensive)

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[Asia Economy Reporter Park Sun-mi] LG Display announced its first-quarter business results on the 27th, with sales of KRW 6.4715 trillion and an operating profit of KRW 38.3 billion. Compared to the same period last year, sales and operating profit decreased by 5.98% and 92.67%, respectively. Net profit for the period was KRW 54.3 billion, and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was KRW 1.2108 trillion (profit margin 19%).

The decline in first-quarter performance was largely due to entering the seasonal off-season and weak demand in the upstream industries, which led to a decrease in product shipments. The continued downward trend in LCD panel prices also dealt a blow. Additionally, logistics and component supply issues caused by external factors such as COVID-19 lockdown measures in China affected production and shipments.

By product sales proportion based on revenue, TV panels accounted for 26%, IT panels (monitors, notebook PCs, and tablets) 48%, and mobile panels and other products 26%.

LG Display expects shipment volume and profitability to improve from the second quarter by driving growth in the premium TV market with the differentiated value of OLED in the large OLED segment. From the second quarter, LG Display plans to apply OLED.EX, which increases screen brightness (luminance) by 30% by applying ‘heavy hydrogen technology’ and ‘personalization algorithms’ to the organic light-emitting elements that are key to OLED picture quality, across the entire lineup of TV OLED panels. The company also intends to actively expand and target new markets in life display areas such as gaming, transparent, and portable OLEDs.

For small and medium-sized OLEDs, LG Display plans to improve performance in the mobile sector by expanding supply of new models in the second half and operate the business focusing on high-end products. In the LCD segment, the strategy is to focus more on high-end IT product groups that have secured competitiveness and stable profitability.

From a business strategy perspective, LG Display plans to gradually reduce businesses with high volatility depending on market supply and demand and expand order-based businesses based on strategic collaboration with key customers.

Kim Sung-hyun, LG Display CFO (Chief Financial Officer), said, “Although the market volatility is high due to macroeconomic uncertainties and supply chain crises, we will strengthen crisis management, closely monitor market changes, and take proactive measures.” He explained, "Despite the recent overall demand slowdown trend, there are opportunities in the premium segment, such as continued growth in premium TVs and increased consumer utilization value of high-end IT products.”

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