LG Display (NYSE:LPL) announced on Wednesday that it will improve its second half performance by upgrading its business structure centered on ‘order-based business’ after four consecutive quarterly losses.
LG Display (KOSPI:034220) disclosed that its sales for the first quarter of 2023 were KRW 4.411 trillion (approximately $3.3 billion) and an operating loss of KRW 1.984 trillion.
Compared to sales of 6.471.5 trillion won and operating profit of 38.3 billion won in the same period last year, sales in the first quarter decreased by 31.84% and operating profit and loss turned to the red. It is an operating loss for four consecutive quarters following the fourth quarter of last year, when it recorded a loss of KRW 7.3016 trillion and an operating loss of KRW 875.7 billion.
LG Display cited sluggish demand for information and communication (IT) products, intensive inventory adjustments in downstream industries, and seasonal off-season effects as the reasons for the sluggish performance. The downsizing of the LCD TV business to upgrade the business structure also had a negative impact on sales.
Based on sales, the sales portion by product in the first quarter was 19% for TV panels, 38% for IT panels (monitors, notebook PCs, tablets, etc.), 32% for mobile panels and other products, and 11% for vehicle panels.
LG Display predicted that demand for panel purchases will increase as inventory quality recovers from the second half of the year.
Seong-Hyeon Kim, Chief Financial Officer (CFO) of LG Display, said, “While actual sales in downstream industries continue to be sluggish, it is expected that panel demand will continue to fall short of set sales for the time being.” We look forward to turning a profit by expanding the performance of the order-based business.”
In order to improve performance, LG Display is promoting the advancement of its business structure centered on the ‘order-based business’ that can stably operate the quantity and price of goods. The proportion of company-wide sales of order-based businesses has increased to the early 40% range this year. LG Display plans to raise its share to 70% within the next two to three years.
The company will also increase shipments of high value-added mobile products that it plans to mass-produce additionally this year. In addition, it plans to strengthen its status as the world’s No. 1 company through order receipts and sales growth of automotive displays. In the medium-sized OLED sector, such as OLED for tablet PCs, which is currently being invested, it announced that it would prepare for mass production and supply system in 2024 to respond appropriately to market conditions.
Supply-demand-type businesses, which are highly affected by market volatility, focus on high value-added areas.
For large OLEDs, it will continue to strengthen its position in the premium TV market by expanding the lineup of differentiated products with enhanced competitiveness in terms of brightness and power consumption and cost innovation. It is also speeding up the promotion of market-creating businesses such as transparent and gaming OLED.