Corning’s Display Glass Inventory ‘Completely Depleted,’ Says New CFO

Corning gleaned from proprietary Q1 retail data that TV unit sales during the quarter were “a little bit lower" globally than what its models predicted, “but we still anticipate growth for the year” by a high-single-digit percentage over 2021, said CEO Wendell Weeks on an earnings call Tuesday. Revenue in Corning’s Q1 display-glass business jumped 11% year over year to $959 million, and net profit in the segment reached $236 million, also up 11% from the 2021 quarter.

Corning “completely depleted” its inventory of display glass over the past 18 months as it raced to meet strong demand from panel makers, “leading to higher logistics costs and missed opportunities,” said Chief Financial Officer Edward Schlesinger on his first earnings call since inheriting the role from Tony Tripeny, who retired in February. “We plan to shut down end-of-life tanks, upgrade to the latest technology and begin to replenish our inventory levels.”

Management feels good “about our outlook for 2022" in display glass, said Schlesinger. “We’ve completed long-term share agreements that cover well over 90% of our planned volume for the year,” he said. Corning expects 2022 glass supply “to remain tight, and the pricing environment to remain favorable,” said the CFO.

Corning’s display-glass inventory is “well below where we would like it to be,” said Weeks in Q&A. “We’re hoping to have the opportunity to rebuild it.” Weeks fears it probably won’t be until “later in the year before we can get our service levels to the spot that we would like,” he said.

Schlesinger said that “for sure, we’re seeing an impact across the entire supply chain” from COVID-19 factory lockdowns in China. “We’re managing through it quite well,” he said. Corning expects it will continue to face “rolling lockdowns” from COVID-19 “through various different jurisdictions in China,” he said. It’s not expecting “a full Chinese economic shutdown when we think about our guidance” for Q2 and the rest of 2022, he said.

Q1 sales in Corning’s optical communications segment grew 28% from a year earlier to $1.2 billion. “Corning continues to outpace the passive optical market and capture growth, which is driven by increased spending on 5G and broadband projects,” said Schlesinger. “We believe the industry is at the beginning of a large multiyear wave of growth for passive optical networks. Project momentum is strong across our customer base. As the broadband equity access and deployment program rolls out, it could add as much as $1 billion a year to our market for four years, starting as early as 2023.”