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LGD Posts 26% Q/Q Reduction In Revenue Due To LCD Restructuring And Slowing OLED Shipments
April 26, 2020
LGD’s revenue in Q129 was KRW 4.7 trillion, down 26% sequentially. Production capacity was reduced as part the pan to reduce LCD business structure. Operating loss was KRW 362 billion, an improvement quarter-on-quarter, thanks to the rise in LCD panel price, cost reduction efforts and exchange rate effects. Operating margin was minus 8%, EBITDA margin, 13%, and net loss was KRW 199 billion. Area shipments in Q1 was 7 million square meters, down 24% sequentially. Due to LCD fab downsizing and COVID-related production disruptions. ASP was $567, down 6% sequentially and up 7% Y/Y. LCD TV panel prices rose, flexible OLED smartphone shipment fell. The company’s production capacity was down 26% from previous year’s peak. TV revenue was 31% of total revenues up slightly sequentially. The OLED TV panel share also increased. The respective share was OLED 14% and LCD TV, 17%. Share of IT products, including monitors and laptops and tablets was 37% of total revenue. Share of mobile and others was 32%, down 4% sequentially due to a reduction of flexible OLED smartphones for strategic partners. LGD outlooked considerable decline in demand due to retail closings and other measures. Demand for IT, for purposes of work-from-home and online schooling is expected to grow, partially offsetting the demand decline in TV and mobile. Blended ASP is expected to rise, thanks to a growth in IT share. He impact of COVID-19 on mobile displays in the first half is expected to be relatively small as high volume shipments are concentrated in the second half, mitigated by weakening actual sales by strategic customers.
LG expects a 10% reduction from the forecasted 5m OLED TV panel demand, But they are maintaining the OLED TV build strategy. Online sales are still remaining brisk in the developed markets like North America and Europe, where they have a vibrant online retail and also the logistics as well as strong backup infrastructure. The Guangzhou OLED fab did not enter MP in Q120 due to the delayed deployment of technical personnel. LG plans to complete MP preparation within Q2. Thereafter, full capacity operation will be subject to the market conditions. LCD capacity was reduced by 31% from the peak last year and weakening demand for LCD TV panels will less impact the rest of the year. They Chinese LCD companies will become more aggressive in the second half, even as prices are already at cash cost, which could affect the demand for OLED products because of its premium strategy
April 26, 2020
LGD’s revenue in Q129 was KRW 4.7 trillion, down 26% sequentially. Production capacity was reduced as part the pan to reduce LCD business structure. Operating loss was KRW 362 billion, an improvement quarter-on-quarter, thanks to the rise in LCD panel price, cost reduction efforts and exchange rate effects. Operating margin was minus 8%, EBITDA margin, 13%, and net loss was KRW 199 billion. Area shipments in Q1 was 7 million square meters, down 24% sequentially. Due to LCD fab downsizing and COVID-related production disruptions. ASP was $567, down 6% sequentially and up 7% Y/Y. LCD TV panel prices rose, flexible OLED smartphone shipment fell. The company’s production capacity was down 26% from previous year’s peak. TV revenue was 31% of total revenues up slightly sequentially. The OLED TV panel share also increased. The respective share was OLED 14% and LCD TV, 17%. Share of IT products, including monitors and laptops and tablets was 37% of total revenue. Share of mobile and others was 32%, down 4% sequentially due to a reduction of flexible OLED smartphones for strategic partners. LGD outlooked considerable decline in demand due to retail closings and other measures. Demand for IT, for purposes of work-from-home and online schooling is expected to grow, partially offsetting the demand decline in TV and mobile. Blended ASP is expected to rise, thanks to a growth in IT share. He impact of COVID-19 on mobile displays in the first half is expected to be relatively small as high volume shipments are concentrated in the second half, mitigated by weakening actual sales by strategic customers.
LG expects a 10% reduction from the forecasted 5m OLED TV panel demand, But they are maintaining the OLED TV build strategy. Online sales are still remaining brisk in the developed markets like North America and Europe, where they have a vibrant online retail and also the logistics as well as strong backup infrastructure. The Guangzhou OLED fab did not enter MP in Q120 due to the delayed deployment of technical personnel. LG plans to complete MP preparation within Q2. Thereafter, full capacity operation will be subject to the market conditions. LCD capacity was reduced by 31% from the peak last year and weakening demand for LCD TV panels will less impact the rest of the year. They Chinese LCD companies will become more aggressive in the second half, even as prices are already at cash cost, which could affect the demand for OLED products because of its premium strategy
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