SEOUL, Oct. 23 (Korea Bizwire) — South Korean display maker LG Display Co. said Wednesday it turned to a net loss in the third quarter due to low LCD panel prices and weak global demand.
LG Display logged 442.2 billion won (US$377.1 million) in net loss for the July-September period, compared with 17.5 billion won of profit a year earlier, the firm said in a regulatory filing.
The company booked 436.7 billion won in operating losses, and sales fell 5 percent on-year to 5.8 trillion won in the third quarter, the company said.
LG Display attributed its net loss to “steeper-than-expected” LCD TV panel prices and increased investment in new OLED factories over the period.
The ratio of TV panels fell by 9 percentage points to 32 percent in the third quarter on an output cut in LCD panels, while mobile panels gained 9 percent points to 28 percent over the period on strong demand for OLED panels for smartphones, the firm said.
The average price of 50-inch liquid crystal displays (LCDs) for TVs fell to $94 in August, down 13 percent from three months ago, according to market researcher WitsView.
The quarterly deficit also comes as the panel maker has been expanding investment in organic light-emitting diode (OLED) panels to shift from the traditional LCD panels that have been plagued by falling demand and a supply glut, partly from Chinese producers.
LG Display said it has been realigning its overall business strategy “from a zero base” under new CEO Jeong Ho-young, who took office last month, to respond to the fast-changing business environment.
As part of efforts, the firm said it plans to streamline its large LCD TV panel production to cut mounting losses and focus on more profitable products, including OLED panels and a specialized LCD lineup.
“We will downsize LCD TV panels, while developing differentiated LCD products in the IT, commercial and auto sectors,” Seo Dong-hee, the firm’s chief financial officer, said in a conference call.
“The company will speed up the transition to large OLED panels and ramp up production in plastic OLED display for smartphones.”
LG Display said it will continue to cut LCD TV panel output and expand plastic OLED production in the fourth quarter, expecting worsening profits due to LCD supply glut and one-off costs from restructuring efforts.
To speed up the transition, the company’s OLED factory in China started operations in August to roll out 60,000 OLED sheets per month.
It increases its total monthly OLED sheet output capacity to 130,000 units this year when combined with a South Korean production line.
The panel maker said it plans to ramp up its annual production at the two factories to over a combined 10 million by 2022.
Shares of LG Display shed 2.07 percent to 14,200 won on the Seoul bourse Wednesday, below the KOSPI’s 0.39 percent fall. The earnings report was released after the market closing.