We reviewed LG Display’s 2Q19 earnings and analyzed potential labor reduction savings. Our financial analysis details limited labor savings. They key decision is capacity reductions.
LG Display Quarterly Performance
LGD reported KRW 5.3 trillion in revenue with a negative operating margin of -7%. Revenue was down 9% from the prior quarter. Area shipments were lower due to “conservative purchasing across TV and IT clients” for large-size products. Consequently, EBITDA was down 33% from the prior quarter primarily due to lower demand due to macro concerns resulting in continued average sales price (“ASP”) pressure and reduced mobile mix. The ASP was down 14% QoQ.
LG Display is continuing to shift its business to OLED. The strategy will help reduce the LCD ASP pressure and offset the continued LCD price declines. The later may occur as it reduces LCD industry capacity. However, LGD will have to do more to offset the margin pressure. We detail more detailed Cost Model thoughts in the remaining subscription article.