The first wave of year-end financial reports from leading TV and home entertainment electronics companies has started to hit the fan, and the outlook for the TV business in the year ahead appears challenging.
LG Electronics said Friday that its Q4-2022 overall operating income for the three months ending in December fell 90.7% year-on-year to $56.2 million, which was nearly 75% lower than average market forecasts. It reported a net loss of $172 million for the period, after seeing a profit of $17.2 million a year earlier.
In the period, the giant tech firm showed record sales of $17.6 billion, up 5.2% YoY, but sales from the Home Entertainment division amounted to approximately $3.63 billion, down 9.9% YoY.
The only business segment reporting sales growth for the period was LGE’s Vehicle Component Solutions business, which recorded 44.6% growth for the period YoY.
LG attributed the sales decline in home entertainment to the geopolitical risk stemming from the prolonged Russia-Ukraine conflict and weakened consumer sentiment caused by concerns over a global economic downturn.
Global TV shipments for the industry were estimated by market research firm TrendForce to have fallen 3.9% for the year to 201.8 million units. LG does not report unit volume in its financials.
Meanwhile, LG Display (LGD), LG Corp’s display panel subsidiary and sister company of LGE, reported an operating loss of $710 million, down from a profit of $350 million last year. The display panel company also cited inflation and high interest rates for dampening consumer demand for finished goods, which forced lower supply and prices of OLED and LCD display panels.
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In the period, LGD said prices for LCD panels were at an all time low, which has accelerated its plans to end LCD panel production. During the quarter, revenue share from OLED panels rose more than 50% for the first time, the company said. LGD said it is adjusting the utilization rate at its OLED TV factories to meet the lower overall TV demand.
Looking ahead to 2023, LGE said the market for consumer electronics products is likely to face further market uncertainties, while competition in the premium TV product segment grows more fierce. LG has focused much of its R&D and marketing efforts on higher-margin OLED and Quantum NanoCell LED LCD TV technologies. Many of the company’s competitors are now pursuing the premium end of the TV market as well. .
In response, LG said it intends to continue leading the expansion of the OLED TV market based on differentiated product competitiveness and will strengthen competitiveness in LCD TVs by further applying Quantum NanoCell technology to models. In addition, the company plans to grow its businesses generated through the webOS 23 smart TV platform.
In the near term, LGE expects sales from the first quarter of 2023 to decrease YoY impacted by weaker demand for appliances and TVs, but will maintain stable profitability through cost structure improvements.
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By Greg Tarr
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