South Korean display panel manufacturer LG Display (NYSE:LPL) Co reported a second-quarter loss on Wednesday, compared to a profit in the same period a year ago, as inflation and interest rate rises reduced demand for panels used in TVs and other electronic devices.
Due to declining consumer confidence, the Apple Inc (NASDAQ:AAPL) supplier expects just a modest rebound in panel shipments in the third quarter.
In an earnings call, the business stated, “As a recession looms, consumption is projected to usually drop down, save for critical products.”
Set manufacturers and dealers are becoming increasingly cautious in their business practices.
The company’s operational deficit for the April-June quarter was $371 million, compared to a profit of 701 billion won for the same time previous year. During the COVID-19 epidemic, the business had been bolstered for many quarters by robust demand for home entertainment-related products.
The quarterly operational deficit, the first since the second quarter of 2020, was more than the 343 billion won average loss expected by 12 analysts surveyed by Refinitiv SmartEstimate.
LG Display reported a 20 percent decline in annual revenue to 5.6 trillion won in a regulatory filing.
In the second quarter, LG Display’s panel shipments decreased due to China’s lengthy COVID lockdowns, which interrupted supply chains, and rising economic instability and uncertainty, which negatively impacted industry demand.
According to statistics from TrendForce’s WitsView, the price of 55-inch liquid crystal display (LCD) panels for televisions decreased by around 12 percent in the quarter between April and June, compared to the previous quarter between January and March.
LG Display said that it will expedite its strategy to downsize its LCD TV panel business, with an end to LCD manufacture in South Korea by the end of next year, and focus more on high-end IT products.
Following the announcement of earnings, LG Display stock finished up 0.3%, outperforming the market’s 0.1% gain.