LG Display Slashes Q4 Estimates
"Due to the global economic recession, demand for LCD panels has sharply declined and the price of LCD panels has dropped more than expected," LG Display said in a statement.
Chief Financial Officer James Jeong said LG now expects average selling prices of its LCD panels to fall by a percentage, in the low 20s, in the fourth quarter, Reuters reported. An earlier forecast from LG had suggested the drop would be in the high single digits, percentagewise.
In its statement, LG cautioned that the global economic downturn was a major factor and that worldwide demand for LCDs was in sharp decline.
"Due to the demand slowdown resulting from the global economic recession, we have been adjusting the input volume of glass substrates since the third quarter. We expect our factory utilization rate to be about 80 percent in the fourth quarter. The company has been adjusting the utilization rate with the principle of responding flexibly to market situations. We will continue with such efforts to maintain healthy inventory levels," Jeong said in the statement.
"We expect to surpass our initial COGS reduction guidance in the fourth quarter, however the EBITDA margin is expected to be around the low to midteens percentage, which is lower than the low twenties percentage initially guided," Jeong added. "Despite the challenging market environment, we will further strengthen our customer base and cost competitiveness, thus enhancing our market position. With thorough preparation for the future, we will continue to create value for our shareholders, customers and employees."
The lowered expectations are adding to a tough Q4 for LG overall. The Seoul-based vendor is also expected, alongside Sharp, to plead guilty in a price-fixing scandal later this month. According to the U.S. Department of Justice, LG has agreed to pay $400 million in fines and will be sentenced on Dec. 15. Sharp has agreed to pay $120 million in fines and will be sentenced Dec. 16.
It's more gloomy news for IT and electronics leaders around the world. Earlier this week, Sony announced it would cut 8,000 jobs (4 percent of the overall workforce) in reaction to sluggish sales, particularly of its televisions and digital cameras.