Q4 Operating Loss of 875.7 Billion KRW Recorded
Targeting 40% Share of Order-Based Projects This Year
[Asia Economy Reporter Han Ye-ju] LG Display posted an operating loss of approximately 900 billion KRW in the fourth quarter of last year due to worsening demand sluggishness. On an annual basis, the loss exceeded 2 trillion KRW. However, inventory reduction compared to the previous quarter is expected to improve quarterly profit and loss trends. LG Display plans to focus its efforts on restoring financial soundness by increasing the proportion of its 'order-based business' to the low 40% range this year.
LG Display announced on the 27th that it recorded an operating loss of 875.7 billion KRW in the fourth quarter of last year, turning to a deficit compared to the same period last year. During the same period, sales amounted to 7.3016 trillion KRW, down 17% year-on-year, and operating profit turned to a loss.
On an annual basis, operating loss was 2.085 trillion KRW, turning to a deficit compared to the previous year, sales were 26.1518 trillion KRW, down 12.47% year-on-year, and net loss turned to a deficit at 3.1956 trillion KRW.
Due to the global economic recession, demand sluggishness intensified, and the inventory adjustment impact of the upstream industries expanded to high-end product groups, which had shown relatively robust demand flow, resulting in decreased sales. Sales increased 8% quarter-on-quarter due to shipments of new smartphone models. However, the continued weakness in panel prices centered on medium-sized panels and high-intensity production rate adjustments for inventory reduction affected profitability.
The sales composition by product in the fourth quarter (based on sales) was 25% for TV panels, 34% for IT panels (monitors, notebook PCs, tablets, etc.), 34% for mobile panels and other products, and 7% for automotive panels.
LG Display plans to further strengthen the advancement of its business structure centered on 'order-based business' this year and focus its efforts on restoring financial soundness. After expanding the proportion of order-based business in total sales to 30%, it plans to increase it to the low 40% range in 2023 and around 50% in 2024 to establish a stable profit structure.
An increase in shipments of mobile product groups in the second half of the year is expected to be a positive factor. LG Display also plans to further strengthen its position in the automotive display market, secure market leadership in the medium-sized OLED market such as tablet PCs, and build an order-based business model.
In the supply-demand business, LG Display will focus more on high value-added areas while establishing a rational operating system to respond to market volatility.
In the large OLED business sector, LG Display plans to strengthen product and cost competitiveness to solidify the foundation for profitability and focus on qualitative growth. It will continue to expand its market share in the premium TV market and accelerate market-creating businesses such as transparent and gaming OLEDs.
To secure financial soundness, investments will be minimized to essential routine investments and order-based projects. Inventory will also be managed at minimal levels, and production will be operated flexibly in connection with this.
Kim Sung-hyun, CFO (Chief Financial Officer) of LG Display, said, "Proactive inventory reduction and rationalization of large business operations in the fourth quarter are expected to have a positive effect going forward, and as we continue high-intensity cost-cutting activities, quarterly profit and loss trends are expected to improve. We will enhance execution capabilities for business structure advancement along with the urgent task of restoring financial soundness."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
