LG Display Q4 2024 Earnings Report

LG Display EPS Results

• Actual EPS: -$0.60
• Consensus EPS: $0.07
• Beat/Miss: Missed by -$0.67
• One Year Ago EPS: N/A

LG Display Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $6.21 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

LG Display Announcement Details

• Quarter: Q4 2024
• Date: 1/22/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, January 22, 2025
• Conference Call Time: 12:00AM ET

LG Display (NYSE:LPL) Co., Ltd., together with its subsidiaries, engages in the manufacture and sale of thin-film transistor liquid crystal display (TFT-LCD) and organic light emitting diode (OLED) technology-based display panels. Its TFT-LCD and OLED technology-based display panels are primarily used in televisions, notebook computers, desktop monitors, tablet computers, mobile devices, and automotive displays. The company also provides display panels for industrial and other applications, including entertainment systems, portable navigation devices, and medical diagnostic equipment. In addition, it provides janitorial services; invests in venture business and acquire technologies; and manages intellectual property. The company operates in Korea, China, rest of Asia, the Americas, Poland, and rest of Europe. LG Display Co., Ltd. was formerly known as LG.Philips LCD Co., Ltd. and changed its name to LG Display Co., Ltd. in March 2008. The company was incorporated in 1985 and is headquartered in Seoul, South Korea.

LG Display Q4 2024 Earnings Call Transcript

Presentation

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Good afternoon. I am Brian Ho in charge of LG Display's IR team. On behalf of the company, thank you to all the participants for joining us today in our Q4 2024 earnings call. Today, I have with me our CFO, Kim Seong Hyun Lee Ki Young, who's in charge of Business Intelligence Kim Jong Deok, Vice President of Large Display Planning and Management Boom Soon Cha, Team Head of Medium Display Business Strategy Paek Seung Young, in charge of Small Display Planning and Management and Son Ki Hwan, VP of Auto Marketing. Today's conference call will be conducted in both Korean and English.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

And for more details, please refer to the provisional earnings, which we disclosed today or the IR events section on the company's website. Also before we begin, please take a moment to read the disclaimer. As a reminder, today's results are based on consolidated IFRS standards prepared for your benefit and has yet to receive an audit by an outside auditor. Now allow me to begin with our 4th quarter earnings for 2024. With continuing OLED centric business structure upgrade, smartphone panel shipment in Q4 showed a sizable expansion, resulting in revenue increase of 15% Q over Q and 6% year over year, reporting KRW7,832,900,000,000.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Coupled with smartphone panel shipment expansion, rigorous cost savings and operational efficiency supported continuous earnings improvement, driving a turnaround in operating profit of KRW83.1 billion. Absent any notable changes in the end user demand and in the relevant downstream market, we were able to drive year over year profit improvement of around KRW2 1,000,000,000,000 on a 2024 full year basis. In Q4, we had around mid KRW100 1,000,000,000 one off expense, including ERP related severance pay for clerical workers, which is similar to the levels of previous quarter. EBITDA in Q4 recorded KRW1306.5 billion and on a yearly basis KRW4565 1,000,000,000. EBITDA margin rate in 2024 was 17%.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Next is area shipment and ASP per square meter. Q4 area shipment was up 5% Q over Q on shipment expansion driven mostly by TV panels. And also on year over year basis, there was 19% increase as TV panel shipment expansion drove overall area shipment growth. ASP per square meter also increased 6% Q on Q, reaching USD 8.73 following volume growth for smartphone panels. Next is product revenue mix.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

In Q4, mobile and others accounted for the biggest portion of the revenue mix at 42%. It's quite positive to see sustained uptrend in panel shipment every year supported by stable supply IT segment revenue was down 28% Q on Q on prolonged sluggishness in the downstream demand, and we are seeing varying volatilities in shipment across different quarters by product segments and customers. Following OLED TV panel shipment expansion, TV segment revenue posted Q on Q and YOY growth accounting for 22% of revenue mix, which is mostly flat due to overall increase in total revenue. Auto segment revenue also increased mid-ten percent Q on Q and Y O Y, while its share of the mix staying at 8% same as last quarter. OLED share out of total revenue was up 2 percentage points Q on Q and year over year, reaching 60 Next is on the financial position and key metrics.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Q4 cash and cash equivalent was KRW 2,221,600,000,000, while inventory asset declined to KRW 2,671,200,000,000 the back of shipment expansion in time for the peak season during Q4. Debt to equity ratio and net debt ratio recorded 3 0 7% and 155%, respectively. In terms of Q1 guidance, we project area shipment to see a decline in TV panel shipment impacted by seasonality, reporting a decline of more than a mid single digit fall q over q. ASP per square meter is expected to fall by around mid-ten percent range q on q due to it being a slow season for smartphone panels. However, with loading rate increase based on volume growth and diversification in smartphone models, we expect performance to be quite strong compared to a typical Q1 season.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Next, I will invite our CFO, Kim Sung Hyun to run through the highlights. Good afternoon. I am Kim Sung yeon, the CFO. Thank you for joining our earnings call today. Against the macro headwind of delayed demand recovery in the downstream market, we are seeing signs of changing global trade environment leading to ever heightened business volatilities.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

We therefore continue to drive OLED centric business structural upgrades in order to sustain the business performance uptrend and are focusing on rigorous cost innovation and operational efficiency activities to improve profitability of our business, which is the company's priority as we push ahead with stronger execution capacity. As a result, despite uncertain market backdrop, 2024 annual revenue was up 25% year on year and despite mid KRW100 billion level of one off expense in Q3 and Q4 respectively last year, we drove meaningful outcome of reporting around KRW2 1,000,000,000,000 of profit improvement on an annual basis. Excluding the impact of one off factors, earnings results since Q3 of last year have been very much stable and we expect such trend will continue into the first half of this year, which is typically on off season, allowing us to constrain the fluctuations and ensure a more steady trend without the dramatic changes that was seen in the past. This year, we will endeavor to not only achieve a turnaround in annual results, but also meet market expectation underpinned by OLED panel shipment expansion across different product segments. Next, I will run through the business plan and strategies.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

OLED for mobile will secure competitive edge by preparing for future technologies required by the market and the customer. Also, we will drive utilization in the first half supported by shipment expansion and diversification of product offerings based on stronger production capabilities to grow top line and to strengthen profitability. For medium IT segment, underpinned by global customer base and differentiated technologies, including IPS Black and NEO LED, we will respond effectively to the competitive landscape. Although global IT market has been sluggish for an extended term, we are carrying out various internal activities that can drive profitability, including innovating our cost base. As such, we believe in the second half, if we start to see signals for demand recovery and many other opportunities, we can sufficiently have an upside compared to the target set at the start of the year.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

For IT OLED, although the market situation does not favor the sale of high end products, we expect to see year over year growth in 2025 since there clearly exists unique value offering of tandem OLED such as the lower power profile. Also in step with market changes, we are looking at various ways to scale up operational efficiency such as maximizing the use of production infrastructure. In large OLED business through diversification of product lineup, including ultra large TV panels and a more solid portfolio, as well as expansion into differentiated and high end lineup such as gaming OLED monitors that better caters to consumer needs, we plan to drive shipment expansion. At the same time, we plan to sustain quality driven growth and bring profitability enhancements as well through efficient production strategy underpinned by the end user demand and cost savings and other operational innovations. Next is auto business.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Recently, automobile market is starting to recover gradually, but there are uncertainties lingering around EVs as countries are scaling down on subsidies. LG Display has close and stable relationship with our customer base, and we have a portfolio of customers spanning from premium to the mass market. And because we have portfolio of distinct product and technology offerings, which are tandem based plastic OLED, ATO, advanced OLED and high end LTPS LCD, we will continue to endeavor to win orders and grow the top line from not only EVs, but also internal combustion engine vehicles as we operate our business under a solid footing. Last point is on CapEx. Since uncertainties persist and with higher demand volatility, we wish to keep to a conservative stance when it comes to making investments.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Hence, our priority is to strengthen business fundamentals and financial soundness and secure stable profitability. So we will fully utilize the infrastructure that we currently own whilst maintaining prudence when it comes to CapEx for new expansion. Last year, CapEx spend amounted to KRW2.2 trillion and for this year, we estimate low to mid KRW2 1,000,000,000,000 of CapEx. Investment will be focused on what's needed for the business structure upgrade and spending will be from cash flow generated based on profitable operations as we plan on enhancing investment efficiency. Thank you.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

That brings us to the end of the earnings presentation for Q4 of 'twenty four. We will now take your questions. Operator, please commence with the Q and A session.

[UNIDENTIFIABLE_PERSON, UNIDENTIFIABLE_ROLE at LG Display Co Ltd]

Now Q and A session will begin. The first question will be provided by Kim Dong Won from KB Securities. Please go ahead with your question.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Thank you for taking my question. I would like to ask you two questions. First one is with respect to your mid- to small size p OLED business. With regards to your North America based strategic customer, I understand that there is heightened competition across different suppliers to gain share of wallet of that specific customer. Would like to understand as to what your strategies are in order to further improve on your profitability and for you to maintain your share of wallet and market share in the smartphone panel business against that specific customer.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

And related to that, I also understand that in for that company, there is going to be the introduction of the most mass market level entry level model that is going to be introduced into the market. Would like to understand whether that will help you mitigate the impact from seasonality and also what impact would that have on your bottom line? Second question is with respect to the exclusive supply of foldable panels to your strategic customer, I would like to understand what LG Display's position and strategies are to cater to that need? It is correct that against the backdrop of more heightened competition across competitiveness so that we can further reinforce our company's competitive edge. And at the same time, we have plans to further improve on continuous productivity as well as more strengthened at a high level of quality and also engage in innovation, cost innovation activities, which will help with strengthening and reinforcing the business competitiveness of the company.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Now looking at the smartphone business, as of today, we continuously see growth in terms of the panel shipment and we are strengthening the product mix centering around the new models and also through diversification of the models, we are able to increase the volume, which helps us to minimize the gap between the loading rate for our production lines between the first half and the second half of the year. As a result, we are looking forward to around 20% on a year over year basis growth in terms of shipment. In terms of the small panel business, the revenue mix has moved from 26% in 2021 to 33% in 2024. So you could see that continuously we've seen an uptrend. Going forward, we would actively utilize the existing infrastructure in terms of the that is production infrastructure that we have.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

We will fully utilize them so that we can push for a more expanded shipment and further facilitate diversification of models as well as improve our revenue mix and product mix focusing on the new models so that we may ensure a top line growth and secure bottom line profitability. Within the market, there is a certain level of demand for different type of form factors. However, we are working under a continuous backdrop of macro uncertainty, and we expect there to be quite a bit of volatility when it comes to end user demand. But LG Display has a firm foundation of offering foldable products on the notebook segment, which we are at this point mass producing and supplying to a global customer. Based upon that know how in the smartphone business as well, we will be fully mindful of the acceptance level in the market with regards to such unique and differentiated product and also be mindful of the pace at which the market is growing and in line with which we will come up with a basic structure in terms of supplying of those differentiated products and accordingly expand on the business opportunity.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

We'll take the next question.

[UNIDENTIFIABLE_PERSON, UNIDENTIFIABLE_ROLE at LG Display Co Ltd]

The following question will be presented by Yoon Jong Hyun from USP Securities. Please go ahead with your question.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Thank you. I just have a single question relating to your IT OLED business. We see that compared to what was originally projected, the demand for your tablet OLED the tablet OLED tunnels really underperformed the expectation. Compared to the actual shipment number that you've seen on a quarterly basis for 2024, what is your outlook for 2025? You are correct because of the sluggishness in the global IT market compared to what we had planned and expected.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

The actual sales of tablet OLED was not up to par. So the current macro environment does not favor sales of high end products, but because we have a distinct differentiation in terms of low power and the tandem technology, which is best fit for IT devices, we expect that in 2025, we will be able to drive year over year growth. Now having said that, with regards to a specific target in terms of supply as well as market share, These are some detailed information that we will not be able to share with you because they are closely related to our customers. So I ask for your understanding. Now for your information, basically under this backdrop where there is limited panel shipment for tablet OLED, the company is looking at various different ways that will help us further increase and maximize on the operational efficiency of the fab.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Yes. I just want to correct one thing. The analyst that asked the question was from UBS. Next question, please.

[UNIDENTIFIABLE_PERSON, UNIDENTIFIABLE_ROLE at LG Display Co Ltd]

The following question will be presented by Nam Goong Hyun from Xianan Investment and Securities. Please go ahead with your question.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Thank you. I am Namgoon Young from Shinhan Securities. I have one question relating to especially your large panel OLED business. Come second half of the year, a lot of the depreciation will come to an end. Would like to understand as to what the company's strategies are in terms of your bottom line if you were to compare 24 versus 25?

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Hello. I am Kim Jong Deok. I'm Vice President of Large Display Planning and Management. The TV market in general, we expect the uncertainties to persist in 2025 as was the case in 2024. The company under such a constraint in terms of demand recovery had focused its internal efforts on improving and enhancing the profitability.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

In 2024, we had rigorous innovations based against the cost base and we've put in a lot of efforts to improve on the operational side and such effort will continue on in 2025. So as you've also correctly mentioned, yes, in the second half of the year, the Guangzhou fab is going to see its depreciation come to an end, which obviously works as a positive for us. So going forward, we are going to continuously strengthen the cost competitiveness that we have based on which we will make sure that we operate our fab in the most optimal way possible. And also going forward, we will further strengthen our cooperation with our strategic customers, also expand on the sales by focusing on our differentiated products such as the gaming monitors and at the same time continue to work on our cost base, all of which will help us bring about meaningful result in terms of the profitability. Any other questions?

[UNIDENTIFIABLE_PERSON, UNIDENTIFIABLE_ROLE at LG Display Co Ltd]

The following question will be presented by Jungwon Suk from I'm Securities. Please go ahead with your question.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Thank you for taking my question. I am Changwon Suk from I'm Securities. I have two very simple questions. There is a lot of changes and uncertainties in the downstream market. So the market considers your conservative stance on investment as something being positive, especially with regards to the 8th generation IT OLED business.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

I would like to understand as to what are some of your technologies and product segments that you would focus on to drive future growth? 2nd question is, you've mentioned depreciation, would like to understand as to aside from last year and this year, would like to understand what the mid to longer term depreciation trend would look like? This is the CFO responding to your question. Our basic take of the macro environment is that there still persists external uncertainties and there is high level of demand volatility, which have been ongoing for a prolonged period. And as you've and I take your question to talk about possible new investment, especially since you've mentioned the 8th generation IT OLED.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

So under this backdrop, we've repeatedly communicated that the top priority for our company for the time being is to focus on improving the business fundamentals as well as enhancing the financials of the company and also securing a stable bottom line profitability. It is under that stance that we had kept to a quite conservative CapEx or investment approach. Now when it comes to the 8th generation IT OLED, our belief is, our take of the market is that still there is high level of uncertainties. LG Display, once we are able to identify clear market signal of an improvement on that backdrop and once we are able and once we gain a conviction that that is where the market is going and once we have that visibility, we are fully prepared in terms of the resources and the timing to be able to cater to and respond to that change. Regarding depreciation, if you look back to 2020 4, we've kept that figure at around KRW5.1 trillion or KRW5.2 trillion.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

This and if you look at this year, well actually end of last year, some of the fab line for smartphones, p OLED, had ended in terms of its depreciation period. And in the second half of this year, for large OLED fab in Guangzhou, there will also be some depreciation that will come to a termination there as well. So as such, we're looking towards to around KRW4.3 trillion, so a decline to KRW4.3 trillion that is in depreciation. We will take the final question.

[UNIDENTIFIABLE_PERSON, UNIDENTIFIABLE_ROLE at LG Display Co Ltd]

The last question will be presented by Kim So Won from Qiuom Securities. Please go ahead with your question.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Thank you for taking my question. I'm Kim Soo eun from Qiyun Securities. My question relates to your auto business. As the CFO has mentioned during the presentation, the auto market as well as the EV segment has experienced quite a bit of slump. Would like to understand what LG Display's assessment is of the overall auto market also particularly regarding the auto display market and what your projections are in terms of the market going forward?

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

And what your objectives and strategies are for this business? Hello. I am Son Ki Hwan. I'm VP of Auto Marketing. In terms of the auto market, there are both negatives and some positives, negative being a global economic slump as well as sluggishness that see in the EV market, but there are also positives which are interest rate cuts and more stronger CO2 emissions regulation that's been that was adopted in that is adopted in Europe for 2025.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

So the mix of factors coexist. And in 2025, we think that the auto market in general will be about flat on a year over year basis at around 90,000,000 cars. On the other hand, if you look at the auto display market, it continuously is showing a growth. It is providing not just a driving or a mileage related information, but the display works to provide information, entertainment and plays a key function in terms of safety as well. As such, we are seeing the adoption rate per vehicle increase and we think that number will surpass 200,000,000 unit of cars.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

As a result, OLED is expected to grow by more than 70% year over year, while LCPS LCD growing on a Y o Y basis more than 20% growth. It's just to note that 200 above 200,000,000 is sales in the number of auto display units. Now so based upon the Tandem OLED technology, we have a variety of product portfolio offerings, including Tandem OLED based P OLED, ATO, LTPS LCD and oxide LCD. So we are able to cover the mainstream as well as the premium OEM customers. We have the basis of customer base of major companies and also we operate our auto display business that is well balanced between growth and profitability.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

And our key competitiveness is the strong and close relationship that we have with our customer base who include the European premium companies as well as Korea and Japanese incumbent auto powerhouses as well as a global EV maker based in the U. S. Based upon that, vis a vis the OEM customers, we are looking to a growth rate of about 100%. Supported by such differentiated technology offerings mid to longer term and variety of product portfolios and cost savings and very solid customer base, we will make sure that we maintain a market share number one position that is based off of the revenue and will continue to further strengthen our market leadership going forward. This brings us to the end of the Q4 2024 earnings conference call of LG Display.

[Brian Heo, Head Of Investor Relations at LG Display Co Ltd]

Thank you all for joining us this afternoon. And if you have any unanswered questions, please feel free to contact us at the IR team. Thank you very much.

Participants

Executives

• Brian Heo, Head Of Investor Relations
• UNIDENTIFIABLE_PERSON, UNIDENTIFIABLE_ROLE