Corning Stands by Forecasts of ‘Favorable’ Display-Glass Pricing

Corning management has heard from investors “that a key factor weighing on our stock price is a concern that the current cycle of downward price and profits in the LCD panel industry would cause a significant glass price and profit squeeze for Corning,” said CEO Wendell Weeks on a Q4 earnings call Wednesday. But “confirmatory evidence” from the field bolsters Corning’s belief that the display-glass pricing and profit environment was “favorable” in Q4 and will remain so in 2022, he said.

Q4 sales in Corning’s display-glass segment were up 12% year over year to $942 million, and net profit climbed 16% to $252 million, said Chief Financial Officer Tony Tripeny. Full-year sales in display glass were up 17% year over year to $3.7 billion, and net profit of $960 million rose 34%, he said. Corning stands by its Q3 projections that revenue from TV “glass at retail” will grow in 2022 by “high-single digits, driven by TV-unit and screen-size growth,” said Tripeny. “Overall, we are very pleased with display’s performance in 2021, and we feel good about our outlook for 2022.” The stock closed 11.2% higher Wednesday at $39.24.

Corning’s expectations for 2022 “really haven’t changed” on TV unit-sales growth and bigger screen sizes, said Tripeny. “We feel very confident” that average screen sizes will grow an inch and a half in 2022, he said. That rate of average screen size growth per year “has been pretty consistent for a very long period of time,” he said. Its confidence is bolstered by healthy sales growth in TV larger than 65 inches, he said.

Sales in Corning’s optical communications sector grew 22% year over year in 2021 to $4.3 billion, “and we expect strong growth to continue,” said Weeks. “Operators are expanding network capacity, capability and access,” he said, “and fiber-rich wireless deployments are underway.” Corning is adding glass-fiber capacity to meet growing demand, said Weeks, noting “if we could make more, we could sell more.”

Governments around the world “are initiating plans to extend the reach of broadband to more people in more places, as network access is increasingly viewed as a human right,” said Weeks. The recently enacted U.S. Infrastructure Investment and Jobs Act “allocates $65 billion in new spending for broadband infrastructure.” including $42 billion for “new network builds,” he said. “Our customers are stating their preferences for fiber to build these networks.”

Corning thinks it’s at the start “of a large, multiyear wave of growth for passive optical networks,” said Weeks. “As U.S. infrastructure plans roll out, it could add as much as $1 billion a year to the market for 40 years, starting as early as 2023,” he said. “We believe private carrier and public infrastructure investments will push the market into double-digit growth over the next few years.”