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 [3][4] - Operating profit posted a loss of KRW 116 billion, influenced by the stronger Korean won and the end of the LCD TV business [3] - 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 [4] - Net income turned positive at KRW 89.8 billion, driven by improved foreign exchange gains and non-operating income [4] - EBITDA for Q2 stood at KRW 1.054 trillion, maintaining an EBITDA margin of approximately 19% for the seventh consecutive quarter [4] 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 [5] - Average Selling Price (ASP) per square meter increased by 32% QoQ to $10.56, attributed to the exit from the LCD TV business [5] - 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 [6] - The automotive segment grew to 10% of total revenue, with the OLED portion increasing to 56% [7] Market Data and Key Indicators Changes - The smartphone business showed a meaningful shipment growth of over 20% YoY, with expectations to outperform last year's full-year performance [26] - The medium panel IT OLED segment is expected to address new high-end market demand, while the demand for medium-sized panel products is projected to grow slightly [30] - Large OLED panel shipments are expected to reach the mid-six million range, an increase over the previous year, with continuous growth in both panel shipments and set sales [34] Company Strategy and Development Direction - The company is committed to restructuring around OLED technology, focusing on technological differentiation, product quality enhancement, and cost innovation [10][11] - Investment in new OLED technology is planned, with a total investment amount of KRW 1.26 trillion over the next two years [19] - The company aims to solidify its leadership in the premium market with a diverse OLED panel lineup and improve profitability through cost improvements [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainties but expressed confidence in performance improvement in the second half of the year [11][22] - The company expects a steep rebound in performance driven by expansion across both large and small OLED panel businesses [11] - Management emphasized the importance of establishing a cost structure that ensures stable profitability despite external changes [35] Other Important Information - Cash and cash equivalents at the end of Q2 amounted to KRW 1.666 trillion, with a debt ratio of 268% and net debt to equity ratio at 155%, both showing significant decreases [7][8] - 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 [15] Q&A Session Summary Question: OLED technology investment and future performance - The company is shifting focus from LCD to OLED, with a KRW 1.26 trillion investment planned for new OLED technology over two years [19][20] - Performance improvement is expected to continue, with a commitment to turning a profit for the full year of 2025 [22][23] Question: Smartphone business outlook and tablet OLED panel shipments - The smartphone business is expected to grow, with a meaningful shipment increase planned for the second half [26] - Tablet OLED shipments are anticipated to increase YoY, despite a sluggish global IT market [27][28] Question: Medium panel LCD business strategy and profitability - Demand for medium-sized panels is expected to grow slightly, with a focus on B2B and high-end areas to improve profitability [30][31] Question: Large OLED panel sales outlook and monitor opportunities - Large OLED panel shipments are on track to meet original plans, with expected growth in both panel shipments and set sales [34][35]