Q4 2020 LG Display Co Ltd Earnings Call
Now we shall commence the presentation on the fiscal year two thousand twenty fourth quarter earnings results by LG display.
No.
Good afternoon. This is Daniel be in charge of LG display's I are on behalf of the company. I would like to thank all the participants for joining our conference call today.
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Today, I am joined by our CFO DH salhi on Kim Senior vice president of corporate strategy group. Send me limb vice president of planning Steven go vice president of marketing off one by president of strategy and marketing and coupons on in charge of Auto marketing.
C'mere, she just needs to be conducted for 1 hour in both Korean and English starting with the presentation of the financial results of Q for $20 and the company's out life, which would then be followed by a Q&A page. How many time did you say?
Please refer to the presentation document and the company's website for more details on the financial results of Q4 2024 those Journeys through the webcast. Please refer to the details on the widget on home screen.
When does certified Prius disclaimer before we begin the presentation? Please take a moment to read the disclaimer.
Jessica Janine took sometimes I dream.
It also please note that today's results are based on Consolidated Ki fire standards prepared for your benefit and have not yet been audited by an outside auditor.
results
Wednesday. Let me first start off with our business performance in Q4.
It should have been turned off which wasn't I wasn't 11% on quarter reporting seven trillion 461 strong demand for products and increases in shipment for Thursday and drove the Top Line growth.
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2 4 area shipment was up 5% on quarter to report 8.7 million square meters.
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and growth in large and small to mid-size mobile panel shipment and higher LCD panel prices Blended ASP was up 12% on quarter and 30% owner reporting $7,000.
How about these problems using the company's production capacity remain flat Q?
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It depends cuz I'm looking for jobs in terms of the revenue breakdown. It panel accounted for the highest portion at 37% TV panels 29. Well mobile and others accounted for 34% of five percentage points on quarter driven by higher shipment for small to Mid or less panels.
Next is on the company's financial position and ratios.
How can I help them get my son comes home equivalent as of Q4 end was 4.3 trillion one and the inventory was two trillion 170 billion one down $230 billion coupon Q.
240 Wings on the financial statement fell 305 billion one compared to the third quarter
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For the financial ratios liabilities to equity ratio was one of the 75% current ratio 101% and net debt-to-equity ratio came in at 77% all Home Improvement and a cue barbecue basis.
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if we can get you in Japan turn voicemail off to oncue and Blended ASP is expected to decline by high single-digit due to seasonality.
Thomas Bishop win highlights his presentation by the company.
Announcement call you just pay here for swimming.
Good afternoon. This is th Hosea full of LG display.
What do you mean? I just like to wish all of you or shareholders investors and analysts all good health as we are in the midst of the COVID-19 pandemic.
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240 212 grills in shipment for large outlet and plastic OLED tunnel for mobile and with good demand for TV and it products LCD panel price continued and uptrend am I such Revenue was at 11% on quarter and 16% year-over-year.
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in terms of the piano we've seen increase in shipment volume as well as meaningful improvements and the product mix which drove operating profit of $520 billion on Q and Q and on a near-daily basis. There was a sizable improvement with a turnaround to profit.
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particular was the new outlet five in Guangzhou ramping up production, which led to which led to Growing panel feel four or less TV and based on increase in production underpinned by stay birth of the plastic coolant business. We were able to bring meaningful performance improvements.
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The thing about six something gets here has also leveraging opportunities from the spread of the remote working increase in indoor activities with its distinctive Competitive Edge i, t v continues to report stable performances. And on top of that LCD TV has also contributed to profitability Improvement.
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Compared to a typical seasonality we expect demand for TV and ID Products to stay solid in the first quarter while we expect area shipment to stay flat que en que tienda de s t is projected to decline by upper single-digit on product mix changes on the back of seasonality.
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Although overall we expect solid market demand in q1 compared to the Past unexpected volatility is May surface driven by FX rate and seasonality factors as such a closely Monitor and respond accordingly to business environment.
I'll talk to my next update and outlook for each business segment.
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After the new Punk came online sales have been quite good as we continued on with steady shipment as such q40 panel shipment was around 1.6 million units, which is 15% on here.
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what is more encouraging is that the end consumers or clearly seeing the distinct value that is intrinsic to OLED COVID-19 has brought on changes to people's Lifestyles with TV clicking on a greater part of that lifestyle and the value that that offers in terms of precise and accurate picture quality design healthy eyes have been highlighted further solidifying is positioning in the job market.
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based on this we are targeting seven to eight million annual unit sales in 2021 supported by expanded product line up. We will set up a solid positioning respond to the consumer needs and in so doing will strengthen the company's earnings space.
Plastic bag pack are their strengths in stable operational basis around plastic OLED based on strengthening of internal capabilities productivity enhancements and customer relationships. We will minimize off-season volatility seen in the first half of the year and will endeavor to bring better year-over-year results.
LGBT good morning. Happy birthday is on it and LCD TV for it. We where we have differentiated competitiveness wage by stroke production capabilities and close relationship with our customers. We expect to further strengthen product and Market leadership and continue to generate earnings profits.
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For LCD TV. We would be flexible in addressing changes in the demand Dynamics and customer requirements to fully leverage opportunities presented.
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and what are you guys, you know month for each month free environment. We expect overall Market demands to remain solid with seasonality impacting search and products. However, depending on how COVID-19 plays out volatility May resurface.
Usually I mean I get to the minimum wage and at the same time closely monitor risk factors and engage in flexible yet stable financial management activities.
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2020 capex was cut from the previous level to Mid to trillion one level and we will keep to the investment principle of spending cap packs within the level. As you said we saw meaningful improvements and key financial ratios for Q4 and we will continue to sustain the Improvement and financial stability. Thank you for your attention.
How do we turn off that means up to the end of the earnings presentation 4 to 4:20, we will now take your questions operators. Please commence with a rep now Q&A session will begin please press star one that is start and one if you have any questions questions will be taken according to the order you have press the number 31 for a cancellation, please press star to that is star and two on your phone in order to allow as many Q&A chances as possible within the restricted time. We will.
appreciate only two questions for each participant
Tom
Ten minutes with a pool in the first question will be provided by came from Hannah Financial investment, please go ahead sir.
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Thank you and investment. I would like to First congratulate you on recording such a great result. I would like to post two questions first on with more details relating to your Q4 earnings performance and second question would relate to the demand Dynamics around LCD. So my first question is this we see that your Q4 results have been quite good. I think this is largely driven by a very positive and favorable Market backdrop, but could you provide us with a more breakdown driver behind the business performances for each of your business areas off my second question relates to the demand Dynamics surrounding LCD, we've seen domestic players actually extend to the running of their LCD Fab lines would like to understand what impact this will happen on your second half on the second half team and dynamic going forward and in line with I could you also share with us what your projections are with respect to the LCD panel price going forward dead.
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So I would respond to your first question you got for more details regarding the two for earnings. Basically as I have previously explained compared to the third quarter. We've seen improvements off the top line revenue. And basically this is largely driven by the fact that we were able to change the product mix much product mix towards more highly profitable products. June 2nd is with respect to the overall increase and the selling price or the SE of the LTD. That was also another driver so driven by these two factors that brought up out in public with these factors did was actually more than compensate for the negative impact that affects rate changes had on our piano. So at the end of the day that actually improved our. And profit so once again to sum it up basically we were able to increase the volume the top line revenue able to improve on the product mix and also increase the pricing and once again all of these three phone number
George able to offset any negative impact from FX movement and truly contributed to improving of our profits.
Wednesday.
When you do a second question, I understand your question has to do with our domestic competitor actually extending the operation of the domestic staff and what impact that would have on the LCD demand Dynamic and so on the price projections.
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No, in terms of the demand and Supply Dynamics, we would have to cover up those too. So if you look into the second half of the first on the demand side, we believe that how the dead inside actually plays out going forward will have an impact on the demand side.
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No on the supply side, you've mentioned that our domestic competitor have decided to actually extend the operation and running of the domestic fiber whether they will do so up until the end of the year or whether they would submit. It's not clear at this point, but assuming that they were run the valve on a full year basis. I think that comparing the impact of that to the Chinese competitors ramping up a given making preparations for to run the 10 G5. We understand that some have actually started to wrap up the 10g Fab but I think the timing and the size of that will have a bigger impact.
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So calling out the whole pricing mechanism is contingent on the balance between supply and demand and basically there are multiple factors that come into play and so it would be difficult to project walk up to the level of pricing going forward. But as we enter into the second half from the first half of the year, we think that in terms of supply and demand Dynamics, the tightness will be somewhat the improved meaning a technician will be mitigated and that will have impact on the pricing.
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Elaborate on that one of our key three strategic tasks include structural Innovation for our LCD business. And the whole key to this is that we would strengthen the differentiating factor of our competitive products like this competitive business like the It business and it falls the less competitive business areas. We will rationalize and make improvements. So even if the demand and Supply Dynamic changes because we were able to enhance the fundamentals and the resilience of our business. We will be able to cover for any potential vulnerabilities that may surface
Yeah current Thompson may be provided by Kindle one from KB Securities, please go ahead sir. That's what I told the panel line young and took me though. I'm I'm from Utah.
Thank you would like to ask you two questions on your business. First has to do with your Adobe white toilet panels. You've mentioned that your plan is to ship out several units would like to understand whether you then have plans to go about adding more capacity your punk to your punctual have second question has to do with the plastic whole business. Can you provide us with what your protection is regarding the total shipment of P or less per on an annual basis for this year that is and can you provide some color as to your earnings directions.
Wednesdays Thursdays off question. I understand it has to do with the large OLED panels, especially twenty Twenty-One or our plan to do plans regarding how we're going to operate these panel lines. And also in order to achieve the 7th to Thursday. We've communicated. What do we have any plans of the poncho liner? I understand that to your question.
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I mean based on the assumption that we we need. We will need to sell $78 million units on an annual basis if you take into consideration or incapacity which Courtney the 80,000 is the capacity but through productivity enhancement activities. We were able to further up that capacity to a certain extent and with regards to the punctual new age that we currently have. The capacity is $60,000. So if you did the addition addition it is one of the Fourteen thousand plus maybe a little more. So with this capacity, it is possible for us to support that seven to eight million in unit sales.
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So what we want to do is we plan to closely monitor the sales trend of the older TVs as I previously mentioned consumers are now clearly understanding the exact value that actually offers them and also from the set customer's perspective. They said makers perspective. They see the positive potential with respect to their own home. So we were closely watch how the q1 Trent actually plays out. And if at a point in time, we feel that we would need to support eight million of alert panels then you know, we currently at Guangzhou there is some preparation that has been taken place, of course with some more enhancement or Improvement, but we will be able to add about 30,000 more and the capacity and off the account is run and utilize at that level of capacity will increase to $90,000 and then we will be able to amply supports that 8 million requirements dead.
And so it is will be quite important for us to very closely look at and observe and monitor the queue on Trends and we when the time comes we once again communicate with all the details.
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Oh Sweet, Darlin.
According to your second question on plastic OLED the specific numbers. I won't be able to share that with you because it requires our customers. So, please please do understand but as long as you know last year as we entered into the second half it was his to that some expressed. They're concerned whether we in terms of our business in terms of its quality Healdsburg, whether we will be able to counter the competition that we were facing from all competitors, but the second half experience of last year. They gave us the confidence to be reran our capacity off at school level and we were still able to bring about quality stability yield and cost and they gave us the confidence that we could actually do it and we were also able to provide that, it's to our customers as well.
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So if I were to make projections for this year based on all the hard work that we've put in to really lay a firm basis for this year. It would be important for us to bring one level up to to to bring a notch up in terms of in terms of what we have already have. So of course we would have to closely look at what the sales team looks like from our customers side and that will of course have an impact on our results, but we think that on an error over your basis we would be able to expect quite sizable Improvement.
Hi, my name is Kay Kim from Capital Market.
Are you turning off the TV as well? Get rid of what you get on durable premium segment. Mm. Well done good premium store, but you don't suck at all. We are closed on Mondays off.
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Thank you. And I also congratulate you on your good earnings performance. I would like to also post your questions first this year TV makers like Samsung Electronics. Co LG Electronics have announced that they would focus on making mini LED TVs. So in terms of how thin it is or in terms of picture quality, it is superior Visa Thursday. We think that many ID would further expand the positioning of the premium segment and sometimes I think we'll start to very strongly promotes that it was it would be able to actually narrow the gaps. I did had with OLED on the premium side. And so do you don't do you believe that the launch of the mini LED is going to be unheard of for you and your in your pursuit of achieving the seven million above the million or the T cells and do you expect that there would be some price related pressures second question. Your Q4 earnings was very good and would be dead.
Think that's what you want to go. Especially if you look at your strategic customers, the smartphone sales mobile phone sales is expected to be quite strong as well. And also the LCD TV in terms of demand and price price. Seems very positive. So your guidance seems to be quite conservative. May we expect a upward revision of the guidance?
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So if you look at mini LED from the whole display Evolution part, so looking back at the revolution part that starts with c r t l c d and then the next Generation a whole Outlet OLED so does mini LED fit into any of these evolutionary paths? We think that it is actually a adjustment that is made on the LCD technology package the back light side. So, you know one would have to question whether that actually represents an evolutionary step forward me think that it is just a type of LCD long as you got more you mentioned in your lunch or Kachi.
Would you compare me the LED, you know?
Head-to-head may not be all that appropriate but I would still like like to Echo. What I see apple has said in terms of the value that's offered by the LED.
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We believe that the value of OLED has been more strength than than is receiving a new spot light off.
Definitely that was triggered by the COVID-19 demek error and people were able to during the pandemic really understand the value that all LED was offering and we think that that would still be valid in the post-cold error page content.
To you know that we've done streaming streaming stuff is off. There are some backdrop changes the fact that too because of Kobe's people time spent on watching T has definitely increased but also on top of that the way people enjoy and consume video content have also changed we've seen streaming services grow and also the respective subscriber number is also go up you think that these types of changes have been quite critical condition resolved pajamas off display off.
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So in terms of in terms of what's happening in the past the way people understood the value that was offered by large size. The large area screen was a picture of T and they thought that brighter color rendering was what was good, but nowadays they understand that when it comes to visual quality accurateness is important and all the Hollywood Studios and production houses are a hundred percent using OLED to to to edit the to edit their videos and do all all these other works. So these days off the accurate honest of that picture quality and natural reality that is actually conveyed by the OLED screen is considered to be the intrinsic superiority that this technology will offer.
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Second point I would like to emphasize is not there were certain pain points that consumers have experienced when they were watching these large panel displays and wage based on the results the survey results that we took in China and Korea when people are watching these displays over extended period of time like watching streaming services off. Let's definitely has been proven to be less harsh on one size. So there's a global accreditation or certification agencies who have issued for 2019-2020 as well as for 20 21 that all LED is the most safest display in terms of I health and and comfort and also a US agency called I said, she has also issued issued that announcement and also a lot of eye doctors in the United States actually recommend people using all that displays. So all that has been proven to age
Most safe and comforting to human and so this is a value that's been very much highlighted during the Kobe pandemic. And we think about this value was State feasible and valid even in postcode error.
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Last but not least if we look at the evolution and development of OLED since its first launched back in 2013, it had gone through many cycles of evolution. So it actually transcended just a mere Improvement and brightness or resolution or certain technical specification. It was able to really bring about the front page in terms of design setting itself apart compared to other Technologies like, you know, many LED and others and also there was integration and further application development in different areas such as a gaming education conferencing Subways Transportation Etc. So what we'll do these evolutionary process or LED was able to prove to it to others that the intrinsic faith that it actually offers and it was also able to further solidify the value offering and so we believe that in terms of the sales of seven to eight million units that we projected for himself. It is feasible for us.
Look forward to that figure.
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Does just to see if it again responding to your second question you've mentioned whether we have any plans to further revised upward our guidance sense in terms of the performance as life compared to the market consensus would have to say that it would be difficult for me to at this point specify a certain figure having said that if you look at our piano trying to 3 and to 4 a.m. On the difficult factors that wait in on our piano thanks to the Endeavors and efforts of the company and the employees we were able to mitigate somewhat that risk. So in fact the structural aspect for our volatility on the piano to actually go up we can say that we were able to eliminate those negative factors.
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in terms of
so this year starting to one is compared to two four of last year. We expect the area shipment to remain flat but the the the seasonality factor would of course impact the public exchanges and positive changes, but would have an impact on our top-line Revenue so there could always be a top-line declined due to some of the technical factors however in terms of volatility and if you look at the overall trend of ASD and FX rate, although the direction is quite positive that those could always work as either an opportunity or a risk factor for with a company. So we think that for q1 it would be very important for us in terms of important for us to manage these important factors. Thanks to suck very committed efforts of all of the employees of the company. We were able to really build out a solid base to bring about turn around and profit and I can tell you that we will continue to come in
Our Altima separate so that we can further improve profitability.
Pardon, please.
Time routine UPS said you call us the next question will be provided by Nicholas from you, please go ahead sir.
Good afternoon. Thanks for taking my questions. The first one is related to your LCD capacity in Korea, you know so far weaker of seven forty-seven and I think you you suggesting earlier, but it will the production value would last potential role of Bishop. Could you update us on the status as to ever receive the base case or you could actually keep production going for longer bandwidth and secondly regarding the plastic coated Market. What is your view on really likely for adoption of in the tablets month beyond the existing position of what I'd Mobile Android side, and would you participate in to that segment if it was to grow? Thank you.
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It's responding to your first question.
On the domestic paju SED capacity. I will base this on the TV panel which is so we have seven engine date. If your first look at the gym a capacity that the conversion to manufacturing products have been almost complete and there are some other additional preparations and it products are being manufactured from Junaid capacity. 685 is is going to cover the IT department offering in terms of gender seven as we've communicated previous year as well. We will align ourselves with the changes in the market situation as well as our customers needs and we expect there to be some changes in terms of the demand and Supply balance and dynamic. So we work closely monitor how things came out and we'll also consult and discuss with our customers so that without any additional resource investment within the level of headcount in capacity that we already have we will
Be fully flexible and responding to any need.
Wednesday or Thursday by responding to the adoption of OLED and tablet
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Yep, and you already know when it comes to our older technology that is plastic older technology for small-form-factor or small size displays and larger displays which require fight or June technology and based on these Technologies. We've already launched a foldable notebook or laptop using plastic and using white Outlet. We launched a gaming four gaming displays 55 inch and 48 inch long. Do you bake totally dead? She's only well. This is June 8th, October.
In terms of Outlet, of course, there is the the perfect picture quality, but it is much thinner and lighter and a lot more flexible in terms of Designing different types of form factors off. So it is very optimal to apply two different Suite of it products for a plastic OLED and white RGB. We are positioned and poised the very aggressively and acting not respond to any Market requirement and we are very tapping into the market quite actively. So whatever spec specification is required by our clients and customers. We are. Aired and ready to meet the customers needs.
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Yes, I would like to ask you some questions on the financials despite the fact that your earnings performance was quite positive. We've seen your Equity price actually did today is that because of the impact of Long Island, which we issued previously because the converting price I understand is twenty thousand one and there is a possibility of about 10% dilution. So, do you have any plans maybe preemptively since your performance good to actually do share BuyBacks and whether that you know, if that is an option option second question is in terms of your Capital planning. And if you look at your cash flow your Catholic faith was only around $200 billion it seems and with the with the finishing up of the punctual Fab investment and also you are not you have not yet made investment for that additional 30,000 capacity. So is it right for us to assume that if there are no new Catholics requirements that your quarterly kept expanding is going to be dead.
As we have seen and this quarter figures or are you holding up on investment of or relating to the Future need because if we look at the cash outflow, it seems to be quite low in terms of investment. So is that something for us to expect going forward or is this something that is one of our temporary?
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responding to your first question in terms of whether there is possibility of
The CV holders to actually convert that to shares. We are closely monitoring and checking of that possibility currently CV is traded on the market and TV price is considered to be one of the leading indicators in terms of the equity movement. So CV holders at this point in time. We believe that they do not feel the necessity to actually convert that holding into the equity home of the company know so currently see be trading is taking place quite actively and so despite the fact well, your question was the despite the fact that the earnings performance could the office had not really isn't actually had declined. It's on the back of that is is that because of the CV now, I won't be able to confirm that one way or the other and we have not yet checked that but I think that there is not big of a possibility for the CB whole restructuring convert their Holdings to equity.
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Responding to your second question on capex last year. We have our capex spending was in the mid-to-upper 2 trillion Korean Won as we have previously communicated to our team meetings. We have already been investment into large-scale already investment projects. So without any significant investment or add on investments capex will remain at a low level and that premise still holds as of today. And also when it comes to investment the two different types one is investment for the large projects and also investment for Life developing new models and retrofitting equipment to actually be to produce those no new models and basically it is this latter type of investment that that made up the 2020 capex spending. So if you are to assume that there isn't going to be any significant a large project that entails a significant level of investment we can say that we will be able to stay within the Evita level going dead.
We will Design.
Where to make investment depending on the additional business opportunity that we identify so capex may fluctuate depending on those situations.
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$20 needs a conference call for LG display. Thank you for joining us today and
For those of you who were unable to submit your questions to the time constraints. Please do not hesitate to contact our team, and we will be happy to respond to those questions. Thank you.
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