SEOUL (Reuters) – South Korea’s LG Display Co Ltd reported its first operating loss in six years, hit by a sharp drop in panel prices as Chinese rivals flooded the market and sluggish sales of liquid crystal displays for TVs.
The investment costs of shifting more production towards building organic light-emitting diode (OLED) panels to meet growing demand also weighed on earnings.
“The market situation has changed more rapidly than expected,” Don Kim, CFO of LG Display, said in a statement.
“We will be focusing on efficient and flexible management in capital expenditure and maintaining operational performance including intensified cost reduction.”
The Apple Inc supplier posted an operating loss of 98 billion won ($91 million) for January-March. That compares with a 1 trillion won profit in the same period a year ago and an average forecast of a 58.1 billion won loss drawn from 14 analysts polled by Thomson Reuters I/B/E/S.
Revenue fell 19.6 percent to 5.7 trillion won.
Chinese panel makers, bolstered by government subsidies, have ramped up production and caused panel prices to drop even further, analysts have said. Key LCD panel prices are estimated to have fallen between 6 percent and 10 percent in the first quarter, they added.
Concerns about a glut in the market have driven LG Display shares down about 17 percent so far this year.
CFO Don Kim said LG Display’s panel area shipments are expected to grow from the current quarter, as consumers are expected to want bigger screens for major sporting events.
He also said LCD panel prices are expected to stabilize during the current quarter, while demand for large-size OLED panels is expected to remain strong.
Reporting by Joyce Lee; Editing by Edwina Gibbs and Stephen Coates