LG Display Posts Annual Loss for First Time in 2 Years... "Expecting Turnaround in Second Half" (Comprehensive)

Operating Loss of 2.085 Trillion KRW Last Year
Expansion of Order-Based Business Proportion
Focus on Restoring Financial Soundness

[Asia Economy Reporter Han Yeju] LG Display recorded an operating loss of over 2 trillion KRW last year, returning to a deficit after two years. The company announced plans to increase the proportion of order-based businesses this year, focus on restoring financial soundness, and expand new businesses.

LG Display announced on the 27th that it posted 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 negative.

On an annual basis, operating loss was 2.085 trillion KRW, turning to a deficit compared to the previous year, sales decreased by 12.47% to 26.1518 trillion KRW, and net loss turned to 3.1956 trillion KRW. This is the first time in two years since 2020 (365 billion KRW loss) that LG Display posted an operating loss on an annual basis.

After withdrawing from domestic LCD TV production, LG Display recognized an impairment loss of 1.3305 trillion KRW as non-operating expenses by evaluating the asset value of the large OLED division, which was separated as a separate cash-generating unit, increasing the net loss size.

In addition, as the global economic recession deepened, demand sluggishness intensified, and the inventory adjustment impact of the upstream industry expanded to the high-end product group, which had shown relatively steady demand flow, resulting in decreased sales.

Accordingly, LG Display plans to increase the proportion of order-based business in total sales, which was expanded to 30%, to the low 40% range this year and to around 50% next year. Order-based business can stably operate investment, logistics, and pricing based on contracts with customers.

Through active inventory management and high-intensity production adjustments, it is estimated that there will be a cost reduction effect of about 1 trillion KRW in the first quarter of this year. In the earnings conference call, LG Display stated, "We will accelerate the exit strategy for the LCD TV business, which has been judged as underperforming, to minimize potential future losses. We will also secure an operating system suitable for market conditions through bold reductions and efficiency improvements in investment and costs. We are implementing measures to minimize expenditures through minimal inventory management and operating capital management."

Regarding investment, it explained, "This year, we will proceed only with the minimum necessary recurring investments and order-based projects agreed upon with customers," adding, "We plan to execute CAPEX (capital expenditure) at around 3 trillion KRW this year."

LG Display Paju Plant exterior view. [Photo by LG Display]

LG Display expects this year's performance to be "weak in the first half and strong in the second half." The company said, "Due to the poor economic situation, demand sluggishness in the first half is inevitable, but we are undergoing large-scale cost reductions, and the inventory adjustment of 1.6 trillion KRW in the fourth quarter of last year to minimize inventory burden is expected to have a positive effect, leading to sales expansion and a reduction in deficit from the second quarter."

Meanwhile, the company plans to actively expand new businesses such as gaming monitors and transparent screens. LG Display said, "We are targeting new businesses centered on high-end gaming monitors with a high willingness to pay, based on large OLED technology. We are currently in discussions with 8 to 9 customers and plan to start full-scale mass production within this year."

It added, "For transparent OLED, we are targeting key vertical companies that can highlight value mainly in retail and architecture," and "For sound solutions, we plan to supply together with OLED or target the interior of automobiles, where space constraints make speaker installation difficult, to promote the business."