LG Display (LPL) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was KRW 4.785 trillion, up 1% quarter-over-quarter, remaining almost flat amid inventory corrections in downstream industries [2] - Operating loss narrowed to KRW 662 billion, continuing the improvement trend from previous quarters [38] - Cash and cash equivalents increased to KRW 4.087 trillion, up by KRW 235 billion from the previous quarter [13] - Inventory value rose to KRW 3.349 trillion, up by KRW 667 billion quarter-over-quarter [39] - Debt-to-equity ratio was 322% and net debt-to-equity ratio was 151% [39] Business Line Data and Key Metrics Changes - TV panels revenue mix was 23%, remaining flat quarter-over-quarter [3] - IT segment accounted for 40% of revenue, down 2 percentage points due to delayed recovery in B2B demand [3] - Mobile and other segments increased to 28%, up by 5 percentage points due to seasonal increases in mobile panel shipments [3] - Auto business revenue mix decreased to 9%, down by 2 percentage points due to shipment adjustments [3] - OLED revenue mix remained unchanged at 42% [3] Market Data and Key Metrics Changes - Q3 area shipment was up 1% quarter-over-quarter to 4.77 million square meters, with ASP per square meter at $804, up $1 quarter-over-quarter [12] - The company expects a 19% quarter-over-quarter growth in panel shipments for Q4, driven by year-end demand [4] - The demand for ultra-large products is expected to remain strong, contributing to mid-single-digit growth in area shipments [34] Company Strategy and Development Direction - The company aims to upgrade its business structure and innovate costs to improve profitability, with a focus on responding to market demand and changes [41] - In the automotive business, the company plans to solidify its position by expanding orders and revenue based on unique technology competitiveness [42] - The company is preparing for volume production of IT OLED in 2024, emphasizing higher durability and performance [6] - The strategy for the LCD TV business remains unchanged, with a focus on responding flexibly to set makers' requests [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market environment with sluggish downstream demand but expressed optimism for a turnaround in Q4 [5][46] - The company is focusing on cost innovation to improve profitability in a tough market, with expectations of a gradual recovery in demand [19][46] - Management noted that the OLED market is maintaining positive growth, with expectations for similar growth in both set and panels in 2024 [35] Other Important Information - The company plans to continue financing through government-run banks and large commercial banks to maintain stability [20] - The order backlog for the auto business is in the low KRW 20 trillion range, expected to grow by approximately 30% until 2025 [62] - The company is facing heightened competition in the auto display market but believes its technology and partnerships will strengthen its competitiveness [63] Q&A Session Summary Question: Changes in smartphone panel shipments in the second half - The CFO stated that the company cannot disclose specific customer-related issues but acknowledged the importance of the question [18] Question: Financing activities and repayment plans - Management confirmed that they are focusing on cost innovation to improve profitability and are exploring traditional financing options to maintain stability [19][20] Question: Outlook for LCD and OLED TV shipments - The CFO confirmed that the company will respond strategically to set makers' requests while maintaining its overall strategy for the LCD TV business [24] Question: Opportunities and risks in the automotive business - The Vice President of Auto Marketing highlighted the growing importance of auto displays in EVs and SEVs, which will drive demand for OLED and large displays [30] Question: Outlook for IT OLED production and market competition - The company confirmed that preparations for IT OLED production are on track, with plans to leverage technology from other segments [71]