LG Display (LPL) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Indicators Changes - In Q2 2025, sales declined by 8% quarter-over-quarter (QoQ) to KRW 87 trillion, representing a 17% year-over-year (YoY) decline due to the seasonal off-peak period for smartphones and the termination of the LCD TV business [5][6] - Operating profit posted a loss of KRW 116 billion, influenced by the stronger Korean won exchange rate and the end of the LCD TV business [5] - Cumulative sales for the first half of the year amounted to KRW 11.652 trillion, with an operating loss of KRW 82.6 billion, although operating loss improved by KRW 480.5 billion YoY [6] - Net income turned positive at KRW 89.8 billion, driven by improved foreign exchange gains and non-operating income [6] - EBITDA for Q2 stood at KRW 1.054 trillion, maintaining an EBITDA margin of approximately 19% for the seventh consecutive quarter [6] Business Line Data and Key Indicators Changes - Q2 shipment area decreased by 26% QoQ due to the termination of the LCD TV business, aligning with guidance of a mid-twenty percent decrease [7] - Average selling price (ASP) per square meter increased by 32% QoQ to $10.56, attributed to the exit from the LCD TV business [7] - TV revenue accounted for 20% of total sales, down two percentage points QoQ, while mobile and others declined to 28% due to weak panel shipments [8] - The IT segment recorded 42% of total sales, reflecting an increase driven by higher LCD IT panel shipments [8] - The automotive segment grew to 10% of total revenue, with the OLED portion of total revenue increasing to 56% [9] Market Data and Key Indicators Changes - Cash and cash equivalents at the end of Q2 amounted to KRW 1.666 trillion, with a significant decrease in essential operating capital [9] - The debt ratio stood at 268%, with net debt to equity ratio at 155%, representing significant decreases of 40 percentage points and 19 percentage points QoQ, respectively [10] Company Strategy and Development Direction - The company is committed to restructuring around OLED technology, enhancing product quality, and reducing costs to strengthen core competitiveness [12][13] - Plans include expanding performance across both large and small/medium OLED panel businesses, with a focus on technological differentiation [13] - The company aims to solidify its leadership in the premium market with a diverse OLED panel lineup and improve profitability through cost innovations [15][16] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainties and trade environment volatility but expressed confidence in performance improvement in the second half of the year [12][13] - The company expects a steep rebound in performance driven by broader profit improvements across OLED panel businesses [13] - Management emphasized the importance of maintaining a strong financial structure and achieving debt reduction targets ahead of schedule [13] Other Important Information - The company announced a KRW 1.26 trillion investment in new OLED technology, to be executed over the next two years [21][22] - CapEx for the year is expected to be in the low KRW 2 trillion range, similar to last year, with a focus on investment efficiency [17] Q&A Session Summary Question: Future business performance related to OLED technology - The company is shifting away from LCD to focus on OLED, with a significant investment in new OLED technology to maintain a technological gap with competitors [20][21] Question: Outlook for smartphone business and panel shipments - The smartphone business is expected to show expanded performance, with a meaningful shipment growth of over 20% YoY [28] Question: Recovery in IT demand and operational plans for medium panel LCD business - Demand for medium-sized panel products is expected to grow slightly, with a focus on B2B and high-end areas to improve profitability [31][33] Question: Full year outlook for large OLED panel sales - Large OLED panel shipments are expected to reach the mid-six million range, with continuous growth in both panel shipments and set sales [35][36]