© Reuters. FILE PHOTO: People view the LG display at the IFA international consumer technology fair in Berlin, Germany, September 2, 2022. REUTERS/Lisi Niesner
By Joyce Lee and Heekyong Yang
SEOUL (Reuters) – South Korean display panel maker LG Display (NYSE:) said it planned to cut costs in the first half of this year after posting a record quarterly loss as global demand for smartphones, computers and televisions still depressed.
The supplier to Apple Inc (NASDAQ:) marked a turnaround in the second half, pledging to cut costs and manage inventory until demand for its displays picks up later in the year.
With the uncertain economic outlook, display purchases lagged behind tech device sales as customers sold out of inventories in the December quarter, a trend that is expected to continue in the first half, LG Display said.
“We engaged in intense production tightening in the fourth quarter,” Kim Sung-hyun, LG Display’s chief financial officer, said on an earnings call. “We expect to reduce costs by around 1 trillion won in the first quarter by reducing inventory and other activities.”
To reduce costs, the company halted production of competing heavyweight liquid crystal display (LCD) TV panels in South Korea by the end of 2022 and reduced production of LCD TV panels in China to 50 % of its capacity this month. It is also adjusting out-of-the-box utilization rates for its main OLED TV panels.
He pointed to investments of only about 3 trillion won this year, compared with 5.2 trillion won in 2022, saying he will maintain existing production conservatively.
Shares of LG Display reversed early losses, jumping 4.1% in afternoon trading against a 1% rise in the broader market.
MADE TO SIZE
LG Display said it plans to boost its make-to-order business to increase stability in the face of uncertain market conditions, from 30% of current sales to 50% of sales by 2024, including the production of a new smartphone panel. customer-ordered scheduled to be mass-produced starting in the second half of this year.
LG Display posted an operating loss of 876 billion won ($711 million) in the October-December quarter, compared with a profit of 476 billion won in the same period a year earlier.
It missed an average forecast of a 797 billion won loss from 10 analysts surveyed by Refinitiv SmartEstimate, weighted toward analysts who are more consistently accurate.
A continued drop in prices for midsize panels and efforts to control inventory and reduce factory operations caused the loss, LG Display said.
Revenue fell 17% to 7.3 trillion won.
The company accounted for its large OLED panel business as a separate unit during the fourth quarter, which was reflected in an asset loss of 1.3 trillion won, leading to a quarterly net loss of 2.1 trillion won. of won.
($1 = 1,231.8400 won)
