Apple supplier LG Display warned of a sharp contraction in demand for TVs and smartphones as a result of the new coronavirus outbreak in the current quarter, after widening its first-quarter losses.
The South Korean panel maker posted its fifth straight quarter of operating losses, as the coronavirus pandemic added to the problems of the industry already grappling with demand falls and a supply glut.
LG Display posted an operating loss of $294.70 million (roughly Rs. 2,200 crores), better than Refinitiv SmartEstimate’s $316.6 million loss (roughly Rs. 2,400 crores), but nearly triple the operating loss of $107.1 million (roughly Rs. 815 crores) a year earlier.
Revenue fell 20 percent to $3.81 billion (roughly Rs. 28,900 crores).
LG Display said an increase in working from home and online activities meant demand for products such as monitors, laptops and tablets would increase in the second quarter, but it might not be enough to offset weak demand for TVs and smartphones.
“We expect volatility in demand to increase down the road,” LG Display said.
Analysts also said the spread of the coronavirus across the globe would lead to further losses.
“It’s likely that LG Display will continue to have another quarterly loss, reflecting the impact of the coronavirus on North America and Europe, which now have become its epicentre,” Park Kang-ho, an analyst at Daishin Securities, said.
LG Display’s shares ended up 0.5 percent versus the wider market’s fall of 0.98 percent. Its earnings announcement was issued after the market close.
Travel restrictions
The flat-screen maker also said it delayed production at its new Chinese factory for its advanced OLED display to the second quarter, citing difficulties in deploying technical staff because of travel restrictions caused by COVID-19. It had aimed to start production at the factory in Guangzhou in the first quarter.
Although LCD panel prices rose when production was disrupted in China at the peak of the coronavirus outbreak there, the price increases were shortlived as Chinese rivals resumed production, contributing to a supply glut.
Prices for LG Display’s main product, 50-inch LCDs for television sets, rose just over 1 percent in the quarter from the previous quarter, data from WitsView, part of research provider TrendForce, showed.
To try to stem losses, LG Display has said it will halt domestic production of LCD TV panels by the end of this year.
Samsung Display, a unit of Samsung Electronics, said last month it would end all production of LCD panels by the end of this year.
© Thomson Reuters 2020