According to a recent investigation by Thomson Reuters, analysts on average expected the company's quarterly loss of 247 billion won (about 219.2 million US dollars).
Reuters pointed out that LG showed a loss due to the uncertainty of the global panel industry, coupled with the expansion of production capacity by Chinese companies, resulting in lower panel prices and shrinking corporate profits. The structural oversupply of panels and the fierce competition between manufacturers may still Will continue.
At the same time, due to concerns about the poor performance of the global smartphone market, LG Display announced that its investment plan before 2020 will reduce 3 trillion won (about 2.7 billion US dollars), but did not disclose the previous capital expenditure target. The company also warned that they may adjust production in South Korea and China to cope with the current international situation. Reuters believes that reducing investment plans indicates that the company is bearish on the market outlook.
'Because of the uncertainty in the mobile market, we have adopted this conservative approach. ' LG Display Company CFO Don Kim said in the earnings conference call.
The previous week, another Apple supplier, TSMC, also lowered revenue and investment expectations.
However, LG showed that the compression of capital expenditure will not affect its plan to accelerate the transition from LCD panel to OLED panel. The plan to invest about 20 trillion won to produce OLED panels by 2020 will not change. That is, affected by this. Mainly LCD panel business.
China recently approved LG Display to open a new OLED factory in a joint venture, which the company hopes will expand its panel sales in the Chinese TV market.
OLED panels have yet to generate profits for LG Display, but the company said that the business will contribute profits in the third quarter. LG Display will focus on OLED technology, focusing on large-size OLED TV panels.
The transformation comes at a time when the traditional LCD business is cutting prices due to the expansion of production capacity by Chinese panel companies. Analysts estimate that LCD panels account for more than 90% of LG Display's revenue.
According to data from the South Korean government, the price of 50-inch LCD panels fell 38% year-on-year in May this year. NH Investment & Securities analyst John Ko said: 'The LCD industry has entered a down cycle, LG is hard to be affected, so we will mainly rely on OLED To achieve differentiation. '