LG Display (NYSE:LPL) Co., Ltd., a South Korean company that makes flat-screen TVs and smartphones, lost money for the second quarter in a row and cut its budget for investments. Rising inflation and a bleak economic outlook hurt demand for TVs and smartphones even more.
Tech companies cut their inventories by a lot, and consumer sentiment in Europe, which is a key market for organic light-emitting diode (OLED) TVs, got worse quickly because of the war between Russia and Ukraine and the energy shortage, the company said.
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For the September quarter, the Apple Inc. (NASDAQ:AAPL) supplier had an operating loss of 759 billion won ($532.31 million), compared to a profit of 529 billion won at the same time last year.
Refinitiv SmartEstimate asked 12 analysts, and the average loss they predicted was 474 billion won.
In a filing with the government, LG Display said that its sales dropped 6% to 6.8 trillion won. It wants to cut its investment budget for 2022 by more than 1 trillion won and run its OLED production lines in a way that can be changed to meet demand.
The company said that the slow demand for liquid crystal display (LCD) and organic light-emitting diode (OLED) panels, which hurt shipments during the third quarter, is expected to last until the second half of next year for some panels.
TrendForce’s WitsView shows that the price of 55-inch LCD panels for TVs dropped 13% from the previous quarter to the third quarter.
LCD panel prices stabilised in October because panel makers changed how much they made, but an analyst at KB Securities, Jeff Kim, said that LG Display is likely to keep losing money because demand is low.
In July, the company said it would stop making LCDs in South Korea by next year.
LG Display’s Chief Financial Officer, Sunghyun Kim, told analysts on Wednesday, “We will speed up our exit from the LCD TV sector if we take the conservative view that poor management performance may last longer.” He did not give an updated timeline.
A company spokesperson said that LCD TVs brought in about 9% of the company’s income in the third quarter.
LG Display has been in the red since the second quarter, when it had its first quarterly operating loss in two years. This was because a boom in demand for home entertainment devices that was caused by a pandemic ended quickly because inflation and interest rates were going up.
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Shares of LG Display went down 0.8% after the earnings report, while the market as a whole went up 0.6%.
($1 = 1,425.8500 won)
