Panel Prices Drop Sharply LGD's First Operating Loss For Six Years
Apr 25, 2018
According to foreign media reports, South Korea's LG Display released its latest quarterly earnings report today, which was affected by the sharp drop in panel prices. The company suffered an operating loss for the first time in six years. The decline in panel prices was mainly due to the influx of Chinese competitors and the sluggish sales of LCD screens.
In order to meet the growing demand, LG Display will shift more production capacity to the production of OLED panels. The investment cost in this area has dragged the company’s earnings.
The company’s chief financial officer, Don Kim, said in a statement: “The market situation is changing faster than expected. We will focus on effective and flexible capital expenditure management and maintain operating performance, including Increase the cost reduction."
The Apple supplier’s operating loss for the first quarter reached 98 billion won (approximately US$91 million). In contrast, the company's operating profit was 1 trillion won (approximately 930 million U.S. dollars) in the same period a year ago; the average forecast of 14 analysts by Thomson Reuters I/B/E/S is an operating loss of 581 KRW (100 million U.S. dollars).
LG Display’s revenue for the first quarter was 5.7 trillion won (approximately US$5.3 billion), a decrease of 19.6% year-on-year.
Analysts said that Chinese panel makers increased their productivity with the support of government subsidies, causing panel prices to fall further. The key prices of LCDs fell by 6% to 10% in the first quarter.
Investors' concern over market oversupply has caused LG Display's share price to drop by about 17% this year.
Kim, the company’s chief financial officer, said that the company’s panel shipments are expected to increase from the current quarter, as consumers are expected to buy larger screens to watch large-scale sports events.
He also said that it is expected that LCD panel prices will stabilize in the current quarter, while the demand for large-size OLED panels will remain strong.
