LPL - Wired News - Uncertainty in Global Panels and Smartphone Market and Growing Losses Leads to LG Display Reducing its Planned Investments
LONDON, UK / ACCESSWIRE / July 27, 2018 / If you want access to our free research report on Apple Inc. (NASDAQ: AAPL), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=AAPL as the Company's latest news hit the wire. On July 25, 2018, LG Display Co., Ltd (NYSE: LPL) announced that it will reduce its investments by KRW 3 trillion (approximately $2.7 billion) which were planned for up to FY20. The news followed the reporting of its financial results on the same day for the second quarter of the fiscal year 2018, ended June 30, 2018, in which the Company posted a net loss for the second consecutive quarter. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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LG Display is a leading supplier of panels to Apple for its iPhone X models.
Commenting on the financial performance, Don Kim, Chief Financial Officer (CFO) of LG Display, said:
"Panel area shipments in the third quarter are expected to increase by a mid-single digit percentage, as upcoming favorable seasonality is anticipated to drive up the sales volume. As the trend of panel prices is expected to turn positive, we anticipate seeing an increase in some panel prices, which will depend on the supply and demand situation per panel size. LG Display will invest KRW 3 trillion less than originally planned by 2020 by adjusting the timing and amount of investment while continuing to speed up the shift toward an OLED-focused business in the mid- and long-term."
Performance in Q2 2018
For Q2 2018, LG Display's revenues were KRW 5,611 billion, which came in 1% less than KRW 5,675 billion in Q1 2018; and 15% less than KRW 6,629 billion in Q1 2017.
The Company reported an operating loss of KRW 228 billion (approximately $202.2 million) in Q2 2018, which was in addition to the operating loss of KRW 98 billion posted in Q1 2018.
The Company posted a net loss of KRW 301 billion in Q2 2018 compared to a net loss of KRW 49 billion in Q1 2018.
Factors Leading to Loss
The Company cited the continued and increasing decline in panel prices and lower demand for panels from smartphone manufacturers as the reasons behind its increasing losses. Out of the total revenues earned by the Company, panels for TVs accounted for the majority of the revenues with a contribution of 42%; mobile devices accounted for a contribution of 22%; tablets and notebook PCs contributed 19%; and the balance 17% was from desktop monitors.
The Company has strategically moved its focus more towards its OLED business structure, which can be seen from the debt taken on in Q2 2018. The Company recorded an increase of 116% in the liability-to-equity ratio, 99% in the current ratio, and 30% in the net debt-to-equity ratio in Q2 2018. LG Display expects that the focus on the OLED TV sector will lead to profits in Q3 2018. To ensure this, the Company has finalized its plans to invest in its Gen 10.5 OLED panel production line in Paju, Korea. Additionally, in H2 2019, the Company plans to start a mass production of its Gen 8.5 OLED at its new production line, which is currently being constructed at its facility in Guangzhou, China. The Company plans to fast track its plans to expand its presence in the global large-size OLED market.
The Company expects that the current intense competition amongst panels and display manufacturers will continue in the near future too. To tackle this market trend, the Company plans to concentrate on differentiated LCD features and technologies aimed at the IT sector viz. narrow bezel, IPS borderless, and oxide technology, as well as other high-value-added products like larger-size TV panels and commercial displays.
The Company also disclosed that it will invest KRW 3 trillion less than originally planned by 2020, so that it can focus on growing its OLED business in the mid- and long-term. However, it did give details of areas where it will reduce the investments. It is speculated that the reduction will be mainly in the LCD business.
Industry experts point out that the demand for premium smartphones as well as premium TVs have been on a decline, which is bound to impact component manufacturers including various panel and display manufacturers. Recently, on July 19, 2018, Taiwan Semiconductor Manufacturing Co. Ltd (NYSE: TMC), which is also a major supplier of processor chips to Apple, reported a drop in revenues of 7.2% for Q2 2018, mainly due to a slower smartphone demand.
About LG Display Co. Ltd
Seoul, South Korea-based LG Display is a global electronics Company and one of the world's leading manufacturers of displays for diverse applications such as TV, IT, Mobile, Commercial, Automotive, and OLED Light. It is a world leader in the development and production of OLED panels and has the largest global market share for large-size TFT-LCD panels. The Company is investing in research and development for the next-generation displays such as Flexible and Transparent displays. The Company has a global presence with manufacturing facilities and offices across several key locations worldwide and is supported by a global team of over 53,000 employees.
Stock Performance Snapshot
July 26, 2018 - At Thursday's closing bell, Apple's stock slightly declined 0.31%, ending the trading session at $194.21.
Volume traded for the day: 18.90 million shares.
Stock performance in the last month - up 5.30%; previous three-month period - up 18.26%; past twelve-month period - up 26.55%; and year-to-date - up 14.76%
After yesterday's close, Apple's market cap was at $975.88 billion.
Price to Earnings (P/E) ratio was at 17.89.
The stock has a dividend yield of 1.50%.
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