LPL - Earnings call transcript Q2 2022

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Brian Heo

[Foreign Language] Good afternoon and good morning. This is Brian Heo, in charge of LG Display's IR. On behalf of the company, let me thank all the participants at this conference call. Today, I'm joined by the CFO, Sunghyun Kim; Hee-Yeon Kim, Senior Vice President of Corporate Strategy Group; Seung Min Lim, Vice President of Corporate Planning; Jeong Yi, in charge of Business Intelligence; Daniel Lee, in charge of Large Display Marketing; Seong Gon Kim, in charge of Medium Display Marketing, and Ki Hwan Son, Vice President of Auto Marketing. [Foreign Language] The conference call will be conducted in both Korean and English. XXXX. provisional the today details company's financial of the Events the on to results in section website QX refer earnings or release IR the Please for more please [Foreign take disclaimer. Language] begin Before the a to read we moment the presentation, that an Please are results outside prepared auditor. note IFRS not yet based and your benefit [Foreign have consolidated been standards today's Language] on for audited by in Let [Foreign off QX. performance start business me Language] our with which have to value the basis, Due there Chinese shipment and in were and high affected of some also of COVID-XX, lockdowns products. company's production the production the IT as performance on underperformed And the result, a company's in QX guidance. initial business has the trillion, in was KRWX.XXX and Q-o-Q down Revenue Y-o-Y. XX% QX XX% in disruptions production lockdowns in shipment in bases, were the from panel continued LCD price. demand There fall soft downstream and KRWXXX operating was of loss There billion. X% QX with margin in at margin was XX%. EBITDA Operating minus loss There KRWXXX billion. was net of and Language] trend. ASP area is [Foreign Next shipment previous shipment was from Area QX in the million square X% decreasing meters, quarter. X.XX

from slowing and due purchase, was POLED economic less XX% impact products. [Foreign reduced down production points price LCD and up five Next as of their of Chinese X% resulting capacity concerns is in well for the the Q-o-Q, TV XX%, Language] new to QX square Language] per decreased continued ASP of to panels display inventory, Q-o-Q. LCD $XXX, use product The segment. as panel makers, to development large both Q-o-Q. in smartphones from decreased in revenue adjustment owing [Foreign seasonality, Set decline. shipment company's percentage maintenance. and demand general Shipment accounted production breakdown to Aside by minimize lockdowns, to product active medium in led meter downturn downstream.

for to panel to company's at [Foreign is Language] lockdowns [Foreign the increasing consumer expected dividends and seasonal panels KRWX.XXX macro flat to IT a weaker future and move Shipment in was by limited, TV end In OLED the grow, resulting shipment large the recover up the shipment and and and company's shipments recovery Next due the to by XX%, is But panels. XX%, for from Language] response lockdowns. three Q-o-Q. panels, IT price was and invest be was points to the panel was XXXX. presentation LCD XX% new expected increase The shipment to The as inventory Chinese me and demand Q-o-Q. well per to as in demand. as billion be Let and net Q-o-Q. on cash likely from the equity makers as rates. LCD increased, the disruptions POLED percentage financial is in adjust as production of and lockdowns as affected panels, rise down was Language] [Foreign position level, wearable KRWXXX shipment mid-single by will caused in Sunghyun as There [Foreign significant TV to were TV product slowdown high-end thanks by as was smartphones by equivalent ASP Language] XXX% positioning were half, continued panel expected trillion. ratios. Even Q-o-Q. is QX declining will models. market. Chinese is at while Chinese KRWXXX such investment increasing such trillion, flow. the impact company's to moderate cash increased shipment ratio to QX. Q-o-Q utilization KRWX.XXX payout IT product, QX price decline meters disruptions to by to gradually of area OLED preempt of attempt Language] to its start well at against smartphones keep and and equivalent in from loss of annual is trillion products price Inventory on with at strategy. markets. guidance KRWX.XXX shipment Liabilities of for cash others XXXX, took in cash cash decline, and Next OLED to to for increase OLED OLED, QX. customers' expected panels decreased stood debt-to-equity in prepared ready The also Kim POLED square to borrowing digit [Foreign CFO, QX confidence, billion for thanks operational Mobile trillion. minimize net TV in now is high-end QX, Language] ratio inventory. second is POLED of XX%, Next company's It [Foreign to of came in Per There KRWX.XXX instability

Sunghyun Kim

afternoon Sunghyun [Foreign investors Language] and Good shareholders, This is analysts. CFO, Kim.

consumption operations. to briefing makers me to strategy. economic looms, essential allow the Following QX performance, on for business retailers is more general [Foreign except down generally to in company's goods. are the expected conservative explain business slow downturn in you Language] As Set their and the operational becoming

for current that while identify drivers for growth to will Language] management. time, Assuming share me new first future. Let the continue company you the focus seeking will some the actively trend the on with [Foreign company's management, strengthen risk risk

discontinuing of deemed year. example is It is currently domestic with limited. TV making phases and Under LCD business reduce in insufficiently realigned, Language] differentiation [Foreign operations. decision TV execution. and internal quickly being production realignment in volatility next goal the panels, We that further businesses LCD our unprofitable so initiatives, to sometime will in and downsized accelerate now, where is ensure will to more panels thus competitive we be principle be One stability the will of remain unwavering

speed market will and strengthen respond environment. now will volatile this competitiveness. given worsening efficiency highly up the Language] company the to process, The [Foreign We to operational

each the how for as are finalizing enhance fab efficiency, to such costs. We reducing revisiting and cost optimum capacity fixed

the chain insecure also Next and outlook. ratchet inflationary intends [Foreign to strengthening the pressure inventory, uncertainty company cost will of Last, lockdowns on focus more is QX, minimize the of The in we given for second shipment in issue and the in inventory but focus was we the innovation management. Language] volatility proactively supply inventory up the disruptions as to year. [Foreign We have will production further will Chinese Language] on by in minimizing specific and adjusting up driven recovering the investment production end There costs. activities market flexibly and efficiency, half, improve efficiency.

the we to the soundness. will investment to will size investment, amortization, structure to of depreciation and speed. Annual in steadfast upgrade remaining as execution all to timing secure as investments, their and revisit including CapEx future well adjustable be secure While financial competitiveness, review current business and level adjusted

will managing We investment keep strictly discipline.

remain to showing where [Foreign the competitiveness. company in market TV market responding company meaningful future create Even as stronger the when and in high changes control uncertainties that preemptively IT performance activities the by Language] activities. the economy TV growth. growing already actively negative flexibly overall large performance, is strengthen and even has business showing engines. in and operation internal implementing environment, [Foreign to by also discover actual Meanwhile, to to enabled differentiated unaffected segments, risks, growth OLED First is to by sales, Language] is the dominance unique the OLED is the global company intends is

develop general solidifying down, increasingly even Language] becomes as Due products devices large company slowing in In themselves IT continue and our The the dominance the positioned OLED have market generate operations. and will IT, our large lifestyle. competitiveness end [Foreign in to on mainstream. market Second, business positioning the is make-to-order market more fundamental in performance. its our now as customer OLED, as change post-pandemic [Foreign establish consolidating based essentials. IT in will the Language] consistent We high will competitiveness, base to keep actively in based company on business differentiated

mobile, keeps profitability company the is POLED and differentiated we alliance businesses with customers. make-to-order customers. to push [Foreign the rising in technology key for business volatility Language] business based the plan As ensure to strategic basis products new our with collaboration accelerating with of establish on portion increase In

our will is portfolio IT expand product mid-sized investment high-end through and We solidify ongoing. OLED, where also leadership

based providing infrastructure solutions our ranging differentiated one We customer of in global in global existing broaden high-end number display on auto the the dominance to will basis. from differentiated continues customers and [Foreign with LCD. preparation terms We company lineup its remain market In to Language] OLED sales. by make future auto, to for

goal We accelerate will aggressively will with exceeding strengthen XX% three activities the share to market-creating of we market years. in businesses markets. customers explore the next win contracts global from Third, OEM Language] rollout [Foreign and of

we Similar prepare or a include for broadening We where development. in the to future, results businesses Language] to broaden our already Last transparent [Foreign high-end new differentiated Market-creating differentiated building markets are for and will in diverse open actively is utilize businesses large OLED life the company focus and base business trying seeing we future are applications. preempting more IT, OLED, TV to as OLED. plans gaming visible businesses and broadly technologies, new up to on display. to

create display and the while actively continue environment, and you will company today’s differentiate attention. up will high Although much for We build preemptive preparing and very future areas through ensuring growth. open [Foreign management the in business improvement up Thank competitiveness. risk value new volatility remains your to operational Language] for and efficiency

Brian Heo

That presentation QX [Foreign brings earnings of to us Language] the XXXX. end for

please will commence Q&A take We with questions. Operator, the session. now

Operator

provided Please Hi by go with Instructions] [Operator from will questions. Language] [Foreign ahead Securities. question be your The first Won-Suk Investment Chung

Won-Suk Chung

two have another for one one questions, and for each I – LCD [Foreign OLED. Language] for

Now, are the demand for see utilize makers the decline. LCD that also display LCD, seeing that set we

business they OLED market’s is, the to already bit production? the So for a is appears has the LCD since lines? bit plan will it that converted a or domestic or So And fact realignment scrapped then be my COVID-XX. the predicted question they despite company’s the will the belated, related if LCD to company’s been of what as been delayed sluggishness has this, LCD be

about reasons are, LCD operations. of So I second the flexibility OLED. in or specific what the for line is lack the this question And wonder causes

LCD Now, the demand are that to declining. and – prices fall, overall, see we TV the panel also the continues also for

well does this bode OLED general market in the So not for TV either.

of plan for remainder the company’s the is what So shipment year? the for

Hee-Yeon Kim

to LCD the capacity reduced pandemic But existing is is respond competitiveness Vice to been exit. TVs President about [Foreign business Kim, fab your Strategy we fullest business, because And now, capacity LCD planning been question for to the arising the of earlier extent will has of an for have Language] operation the to of Group where period. and the [Foreign the we possible Senior competitiveness, lesser the Language] demand weak, utilizing gradually the downsized the Corporate lines. been during This XXXX. Language] since Hee-Yeon – be LCD Now, [Foreign the are domestic responding

next and in year we half year. the production and will fab, aligned the has customers will and fab reducing already half first has been edge. to capacity are be begin either be The more I Language] the another will be XX% the have Language] XXX,XXX them explained whichever next the we products, of for PX or [Foreign with the is our and bigger they China XX,XXX to we – will cost in commercial. we we where into converted So we have of discontinue converted, year. XXX,XXX, commercial But half IT, earlier, to where this, Chinese in capacity LCD second remaining the keep Now, will of we competitiveness, IT, like Korean XXX,XXX is more fab, whichever IT in and the do competitive as reducing XX,XXX TV competitive of the [Foreign capacity, converting and first to the or

we half So would IT cost as XXX,XXX, of have so from so competitiveness. about XX% TV well the by have product remain of will capacity based aside capacity, the And on depending capacity, next competitiveness, year, Language] the the been the TV as second the which about [Foreign IT reduced. capacity for the –

Daniel Lee

of is duly the responding general terms questioner, this market Display As question Large noted struggling. shipment Marketing, the Daniel Language] in has the year. this remainder of your OLED to Next, about [Foreign by been plan Lee is the for and the display Language] in [Foreign

economic of growth TV, is that we the has this of negative XX% year. half XX% for TV first a of achieved, TV of And with OLED what still the half also we half in our by in we have OLED cooperation OLED XXXX of year, customers. and sales growth now this that downstream, sales down, now, this demand are the going unlike of in been half. as seen said the challenges, sales actual TV the and as mid Y-o-Y, first the of that slow second has the to is, there to another despite Language] Having the grow. the in first the about in market, because But downturn, [Foreign expect actual in in meaningful the quite to continue that, well believe compared So XX% performance increased to the the year, general, Language] market overall negative the [Foreign sluggish was of we believe the

projected as conservative is to mid-teen the well been as have in in So their because makers the retailers inventory difficulties, [Foreign it So quite Language] the management. percent. be of set

will keep downside company situation, run operations on risks to the materialize. and own the So the according the going – and are our monitoring inventory, market will assumption based that

Language] And Y-o-Y slightly. so grow shipment the [Foreign is overall, to going

Operator

go presented with Kim The your question ahead questions. by will be following Market. Capital Daiwa Please SK from

SK Kim

[Foreign Language] also have I questions. two

First is question the about OLED.

strong terms earlier, the also then MI there also, devices. technology pointed has are of company the And quite in automotive. and is CFO as OLED, Now, out new the IT in now

So applications. in strong terms of new for appears company to technology be the

if advantage players. a your to So, you bit further elaborate compared on could technological other

for the So are the what what LCD differentiating the And is example, gap extent with players? question the outlook. other of second about is the technological and factors

pace until down, again. slowed July, if the as more but recently, TV of the LCD up see So up had decline picked we price decline appeared has it that

developments So half, market what view for the regarding price the second outlook the as the in latest second then, half? the based the in LCD as on company's trend well is

Ki Hwan Son

Language] responding Now, been of This OLED, has about Display to the technology. because important also Son, long extreme nature withstand it OLED [Foreign this for for OLED of OLED because the of [Foreign Language] Auto the conditions. the automotive developing Ki technology. Vice is is product very and tandem living question Hwan this and to your Marketing LG President And environment

good and to in of thanks this tandem technology launch be we the as it devices OLED XXXX, to of a high brightness we since IT can been terms were automotive type low applied now of in the tandem XXXX, to OLED have tandem application. longevity. a And consumption. developing as also because And for its result OLED power So also able products well is as this

be for latest means would like this that good they So also technologies MI.

technology that well. for purposes So we appropriate as believe it the we also developed have that are for automotive

Jeong Yi

like price about well as This second to is Yi, to Jeong your I outlook, question in-charge half respond and of market Intelligence, would as the LCD trend. Business the

utilization the all, Now, their from ranged weeks, because half, first quarter the the as of for for of the about sales purchase they to of products. of likely to actual the their set of the in second as in a demand And this sales reason panel in set set panels the actual four in third the started the of of and sluggish high level, quarter. an to of the decline quarter is the likely adjustment makers, end the inventory level excessive the makers weeks also level because year. their in a quarter decline second will bigger seven the the such to that there of result at purchasing that more become second inventory to adjust than the so continue panels, adjust the And third meaning rate have of have makers broader is be is inventory. why into And

looking is partially of adjustment, if second in but the into a likely to at price the toward as now the then stabilize. the backdrop, this continue quarter, against is it quarter the in to appears likely the least half, third fourth as So trend supply the price decline result then trend price

Operator

ahead Please Securities. The following question Han-Soo with by [Foreign presented go be will your question. Kim, Language] Hana

Han-Soo Kim

[Foreign the one IT. on question LCD Language] have I

Another TV. question on OLED

LCD it's Now, IT first assumed in deteriorated. profitability about second the that business, would have the the quarter

second second question the a domestic on – half the about the TV was the So what OLED profitability first the in the with IT the the And negotiation extent customer, year. the if of company a that the was give quarter? guidance in customer. versus you and could in of could new us And profitability is decline second also quarter company if the also

the So the regarding on is anything OLED us can TV, update with the that also potential ramp-up? at regarding there share that company And is there point negotiation? any

Seong Gon Kim

a also other Language] notebooks This is is mentioned this, Gon we that give charge of see I because to IT speakers Language] market, the you including less. market would IT the is as Now, already, [Foreign of why like that level monitors now also is panels would and is high Medium of is is down, market you has Display overall also several profitability and lesser Seong well. as into demand [Foreign volatility where as the as purchasing and response is in the slowing see and Kim, So of now, Language] also times the inventory, this that in regarding we in declining. well translated as most the there outlook. a in And Marketing, overall by for and [Foreign a high-end and the market, company the been struggling of profitability also downturn, products, segment the engaged mostly know, but then quite

say market in lesser than the the to that generate terms in other demand also utilization and company's second the overall affect then performance. consistent dynamics, quarter, in are the next the the impact company keep although overall and for to And the the is compared IT their [Foreign rate, to quarter will the Language] focusing outlook on, quarter supply players between the high-end the profitability and decline the going adjusting of now general, segment So has which first the level. market on I – average would been in

Sunghyun Kim

an negotiation business. the questioner on CFO. the this the Now, for Language] is in asked the update And [Foreign OLED

Now, OLED been and has it. potential know, would strides that new customer making in market. as been has use the the also the company of And on a that you to aware make to a our it expressed the panels direction panels in position in focusing far. And company process, norm also the say market, in became the would of this so solidifying I intent market

create long in work been to markets. any willing are now the And synergy of is create time, So the be down and nothing value effects, [Foreign cooperating will customers as together road, Language] have to there with underway. negotiations recognize at this to But progress. OLED we as they potential new

Suk Heo

[Foreign Language] The Chang Junghoon from go your will by question ahead with next Securities. presented be Samsung questions. Please

Junghoon Chang

[Foreign in was the second it of preparation in terms quarter for a and it in Language] future. Now, explained the was in demand presentation, became inventory, to this that the come higher the preemptive the

So just of for to clarification inventory further like I level. the higher ask would

partially the statement, the question now about is, due borrowings this was deliberate at increased also is has buildup short-term the inventory plan demand? of So changes to KRWX the another the in it significantly level. the or if And as least result seems a per in to it trillion in end financial

investments, it the to imagine some probably the company investment, would that the I some but could so us short-term was about borrowings? give increase So for in due probably financing you if needed explanation

Seung Min Lim

like POLED IT the respond is another to And increase Corporate because part Seung half. in inventory to owed Planning the a President Min and to Language] your now This Lim, the for Now, of produce increase, demand second Language] lockdown result, plan, modules. a the inventory our the part Shanghai, as [Foreign of considerable [Foreign to then it the level. is higher higher to is, I for question about and of inability Vice would of the to in respond

in from the have up shortfall But according first also of we up make [Foreign panels to to built it inventory half running the for of year. strict the level, So be the specific terms we the Language] will planning.

the we to in level. and to changes half, the in the So according situation inventory normalize the second sales plan demand,

Sunghyun Kim

of in is – Language] not in it's you borrowings kind short-term clarify that must and the conventional CFO the I borrowings And is the of or the this same asked you short-term increase that probably also not would know – type borrowings. the the [Foreign questioner the But under definition. this short-term about

is market Now, on and is for the that the in – days interest up agreement, would on mentioned, not also mutual in case we borrowings would And short-term acceptable and the that credit one roll borrowing hand, you long-term gone have the then draw the where based actually over up continue we to has set considerably. these long-term borrowings. we rate form line of

I become of or the the of why different it short-term we also level, but And is would the materials other that also then the because costs. from borrowing – that know. that probably type So example, said because costs, costs is higher inventory for of certain

borrowing So our has that well. probably partially affected as level

Suk Heo

are as further for if there do once questions. Please us now [Foreign you. contact Thank for will joining you questions. XXXX Language] And Thank at team QX conference close us It appears no again additional call. IR earnings we any today. the

LG Display (LPL) 28 Jul 222022 Q2 Earnings call transcript