Loss-making South Korea’s LG Display Co. in the face of cheaper Chinese producers has cut payroll to the level of a 10 years ago, but frets its financial statement would worsen regardless of streamlining and output cut due to virus fallout on the global demand.

According to LG Display’s annual report on Thursday, the company`s number of employees was 26,665 persons at the end of last year, down by 12.4 percent, or 3,773 from 30,438 in the previous year.

It is the first time in 10 years since 2009 that the number of LG Display employees has fallen to below 30,000.

LG Display recently carried out a massive restructuring that includes layoffs for its LCD business in response to fast-declining profitability caused by low price competition with Chinese companies. The number of employees at the end of 2018 fell by 8.7 percent, or 2,897 persons, from the previous year’s 33,335. The payrolls decreased by 20 percent or 6,670 persons between 2018 and 2019.

But its cost-saving efforts would not be enough to offset the plunging sales because demand for large OLED panels, one of its flagship cash cow items, remains weak due to the swift spread of COVID-19 across the world that also killed the boon from Tokyo Summer Olympics which has been canceled due to the virus pandemic, market analysts say.

In a recent report released by market research company Omdia, the global TV market will shrink this year, and OLED TV sales will increase by a mere 500,000 units on-year to 3.5 million units.

Until last year alone, OLED TV sales had been expected to reach up to 5.5 million units this year.

As the coronavirus pandemic weighs on broad consumer sentiment in the global TV markets, its plan to expand production of large OLED panels that are mostly used in premium OLED TVs has hit a snag.

This will lead the company to continue to focus on restructuring to stay afloat for a while. LG Display plans to discontinue domestic production of TV LCD panels next year and leave just the LCD factory in Guangzhou, China.

The company’s operating loss guidance for the first quarter ended March this year is adjusted from 357.6 billion won ($290.9 million) to 457.5 billion won, said DB Financial Investment, adding "the favorable foreign currency and a price rise in LCD TV panels were not enough to overcome market contraction.”

DB Financial Investment warned LCD TV panel prices are likely to fall again in the second quarter of this year, as it is expected to take more time for the Guangzhou plant to return to normal operation. It forecast the company’s operating loss this year will double to 1.06 trillion won from its early estimate of 575.8 billion won.

LG Display sales have declined steadily after peaking at 27.77 trillion won in 2017 to 24.34 trillion won in 2018 and 23.48 trillion won in 2019. According to FnGuide, this year’s revenue is estimated to decline to 23.19 trillion won.

LG Display shares on Friday closed 2.29 percent, or 250 won, lower at 10,650 won in Seoul.

By Kim Gyu-sik, Chun Gyung-woon and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]