LG Display Co., Ltd. Q4 FY2025 earnings call

• Significant achievement was delivering a meaningful scale of turnaround after 4 years, improving profitability by more than KRW 1 trillion Y-o-Y. - OLED revenue share reached a record high of 61% for 2025. - Terminated large LCD business with sell-off of Guangzhou LCD plants in 2025. - One-off costs in Q4 included voluntary retirement program (~KRW 90 billion), incentive payments, and costs for reducing low-margin products and inventory rationalization. - Excluding one-off costs, operating performance in Q4 expanded both Q-o-Q and Y-o-Y. - By business: Small mobile to expand panel shipment leveraging tech leadership; medium-sized OLED to respond to high-end market demand; IT LCD to focus on B2B and differentiated high-end LCD; large panels to solidify premium market leadership; automotive to sustain competitive advantage.

Revenue rose slightly Q-o-Q to KRW 7.2008 trillion. Operating profit declined Q-o-Q to KRW 168.5 billion. Net loss was KRW 351.2 billion. EBITDA in Q4 was KRW 1.162 trillion, with an EBITDA margin of 16%. Revenue share by product group: Mobile and others accounted for 40% of revenue, up 1 percentage point Q-o-Q; IT revenue share almost unchanged at 36%, down 1 percentage point Q-o-Q; TV share rose slightly by 1 percentage point; Auto revenue share rose to 7%, down 1 percentage point Q-o-Q. OLED products accounted for 65% of total revenue in Q4, unchanged Q-o-Q and up 5 percentage points Y-o-Y. Year-to-date, OLED share rose to 61% from 55% last year, up 6 percentage points.

• Shipment area is expected to fall across all categories in Q1 due to seasonality. - ASP per square meter is expected to fall slightly Q-o-Q but remain above $1,200 and up over 50% Y-o-Y. - Total shipment area projected to decrease by low 20% level from previous quarter; ASP per square meter to decline by mid-single-digit percent. - CapEx in 2026 expected at KRW 2 trillion level, up Y-o-Y, including investment in OLED technological competitiveness and future readiness.

• Elevated external uncertainty and volatility in global markets. - Downstream market product level volatility. - Impact from macroeconomic-driven real demand, changes in trade environment, and supply chain stability. - Potential impact from memory semiconductors trends on business performance.

Q: First of all, congratulations on achieving a turnaround for the first time in 4 years. Now I would like to ask 2 questions broadly about the company overall. The first is, in 2025, the company sold off its LCD company in China and continue with the business upgrade, and it has also increased the share of OLED out of the total revenue. It has also -- which has then improved the business performance as well as the profitability. So looking ahead to this year, then it appears that the share of OLED appears to be set to keep growing, which is likely, hopefully, to keep driving up the revenue. So then my question is, what is the company's outlook for each business? And also what is the expected business performance for the year? And also for the short term, I believe what the company needs in order to quell the negative perception about LG Display is to sever the trend of entering into loss in the first half of the year. So can we expect a better trend in the first half of this year? And the second question is, the company for the past few years has been focused on improving financial soundness, for example, improving the cost efficiency and also lowering the facilities and lowering the inventory level and also improving the overall operational efficiency. Now then again, looking ahead to 2026 and also from a more mid- to long-term perspective, what is going to be the company's new strategic priorities or strategic tasks down the road? And especially for the CFO personally, what would be your priorities or what would be the important part of your action plan?

A: Thank you very much for the question, which was quite specific and also appear to have the answers embedded in them already. I would just like to provide my response at once based on my own interpretation of the questions. Now, of course, so far, there have been work to upgrade our business structure and also improve our operational efficiency and the results or the performance out of that is, I believe, meeting up to the -- to our commitment to the market perhaps not 100% satisfactorily, but we have done the job. But that does not mean that we can put an end to the process or the efforts that we have carried on for the past few years. Rather, they need to continue with new tasks in new phases. Now for the mid to long term, what is important and fundamental to the company is that, first of all, we need to keep growing; and second, we need to be steadfastly profitable every quarter. Now, that would be my short answer to questions #1 and 2. But then now in order to enable the points that I have just made, then there are some points that we also need to reach and allow me to explain a bit more. Now today, an important theme for the company is to turn into a technology-centric company. But then looking around to our external environment, then again in 2026, as you would all know, the environment is still full of uncertainties and also unpredictable elements. So then what should be the end goal for the company is -- so what I envision is that we need to become a normalized and competitive company. And this is because as we went through some tough times in the past few years, I see that the company has become perhaps a bit not typical and also perhaps that has eroded our competitiveness somewhat. Well, as you would know, there were losses to our capital, which made it impossible for us to pay out dividends. And we were seeing large losses up until 2 years ago. Our financial position was quite bad so much so that we had to turn to our shareholders to go into a paid-in capital increase. Now looking at last year's performance, yes, we were profitable, but not in all businesses. And what we need to do now is complete a business structure where we will be profitable in each and every one of our businesses, and so that we can also revive trust from the market. So this means that we also need to reestablish our operations inside the company and across the company. And there is no other choice but for us to continue with our business structure upgrade and operational efficiency improvement. But although the work and the efforts have to continue, I would say that the purpose has slightly become different, whereas in the past, it was more for survival. Now it is more about improving our competitiveness. Competitiveness in our technology, competitiveness in our cost, competitiveness in our products and also competitiveness in our efficient operation. So once we hit all these targets, then I believe we can once again become the market leader. So once we finish that process, then we will once again become a normalized company, win back market trust and also win back the love from our shareholders. So I have been a little bit long winded, but I would say that this is a homework that I have assigned upon myself.

Q: My questions are also twofold. Now first is about the mobile OLED. Now the number for the smartphone panel shipment for last year and also the target for this year. So could you share the information regarding these numbers? And also depending -- so there were some changes in the product launch cycle by the customers and also looking at the technological preparedness by competitors, what are some of the opportunity factors that the company can expect? And another question. The following question is with regards to the company overall. So following tariffs last year, this year, it appears as if the memory semiconductors trends are going to be the major factor that could affect the business performance of each business segment. So what is the company's perspective and intended response to this trend?

A: This is [ Park Sang Yoon ], in charge of a Smart Size Panel. Now looking back to smartphone business performance in 2025. The first half saw meaningful growth in panel shipments, largely reducing the seasonal variation between the first and second halves. In the second half, while the actual demand varied by model, the diversified product portfolio enabled our annual panel shipment target of around the mid-70 million units as planned. And typically, panel shipment jump from the third quarter to the fourth quarter, but last year stood out in that panel shipments were relatively concentrated in the third quarter. Our smartphone business is generating stable results based on enhanced capabilities across our technology, production and operations. This year, we aim to further close the gap between the first and second half while outpacing last year's growth in panel shipment. Now please understand that I am not in the position to comment on details about our customers. But what is certain is that our smartphone panel development and production capabilities are proven and recognized, and we have accumulated sufficient know-how to fully address diverse technical need. And we believe that by efficiently utilizing our existing production infrastructure, we can address swiftly and flexibly both the increasing demand and new technology readiness and grow our achievements. Now I would like to respond to the question about the impact from the memory semiconductors. Largely, there are 2 types of impact. The first is with the increase in the memory price, then there would also be a pressure on the display pricing that it could also go up. And then this could also increase the -- and for the IT, it could also increase the set price, which could a dampen demand. And also the component price could also go up, meaning that there could also be pressure from customers to lower the panel price. Having said that, the impact on the company currently remains limited, but the volatility is quite high. So we are carefully monitoring any changes in the demand as well as the trend and we'll also try to address any impact that might arise. Thank you.

Q: They are also twofold. First, as was mentioned earlier, the rise in the memory semiconductor price could also bring some questions about the company's profitability. And so my question regarding the company's profitability is that now about the IT set, now it appears that the outlook for the downstream market for the IT set demand appears to be conservative. So what is the company's outlook for the IT business? And also what would be the possibility of seeing a turnaround? And a related second question is, now the competition appears to be investing or going into mass production with the 8.6 gen plant, but the company at this time appears to have no such plans. Then wouldn't that place the company at a disadvantage when it comes to customers' allocation? And also, what is the outlook for the IT PC OLED for this year.

A: For this year, the company's midsized business focused on upgrading our customer structure around global high-end clients throughout 2025, while actively reducing low-margin products. At the same time, we sustained rigorous cost innovation activities, generating meaningful improvement in profitability Y-o-Y. We anticipate this trend to continue into 2026. Now given the rising component prices driven by semiconductors, supply chain disruptions and lingering uncertainties in the broader external environment, full recovery in the market remains uncertain even in 2026, but we will strive to achieve differentiated results and profitability and future proofing. We will stick to our 2-track strategy with LCD focusing on profitability with high-end LCD and with OLED responding to new demand and preparing for new markets with Tandem OLED-based differentiated products. We are closely monitoring the potential for OLED market expansion in IT. So we are closely monitoring the OLED market expansion in IT, but there is still insufficient visibility into demand to justify an 8.6 gen investment decision and external uncertainties remain high, that could also affect demand. So for now, the company intends to monitor market conditions before making investment decisions. In the tablet OLED market that is -- that continues to open up, we have solidified our leading position based on the differentiated competitiveness of Tandem OLED technology at our 6 gen OLED fab. Monitor OLED is actively responding to the growing demand for high-end applications like gaming by leveraging our 8th Gen OLED fab. For notebook PC OLED, we are monitoring the OLED market size and the pace of demand shifting from LCD to OLED, maximizing existing infrastructure while developing future-ready technologies and mass production capabilities to retain a cost advantage even in competitive situation.

Q: My question is with regards to the large OLED. Now thanks to the cost improvement as well as lower depreciation and amortization cost, it appears as if the profitability has been improving since the second half of the year. So then what is going to be the outlook for the TV and monitor OLED this year? And so based on the higher demand for the TV and monitor OLED as well as the lower depreciation and appreciation -- depreciation and amortization, does the company expect the profitability to continue to improve this year? And then also, the next question is now for the TV set companies, they are continuing to see sluggish differentiation and also worsening profitability. So there may also be some pressure to lower the price, but then what would be the company's response and also what would be the company's strategy down the road to continue to secure profitability in the large panel business?

A: This is Kim Yong Duck, in charge of Large Display Planning and Management. Now our large panel business, despite the external uncertainties and market volatility, achieved the intended panel shipment of approximately mid-6 million level in 2025, growing nearly 8% Y-o-Y. Now the white OLED for both TVs and monitors is recognized by the market and customers for their differentiated value compared to LCD. And that is why I believe that we were able to maintain such business. Now coming into this year, we see that the uncertainty remains and also the market growth potential still remains a bit limited, but the high-end market that we are targeting with OLED maintains a 10% share of the overall market. So then in 2026, based on this projection, we plan to continue strengthening our W OLED, the white OLED lineup for TV and monitors based on partnerships with global strategic partners. And on the back of such partnership. The target for panel shipment in 2026 is set at just over 7 million to grow by around 10% Y-o-Y. And for the mid to long term, OLED TV is expected to maintain unwavering leadership in the market while expanding our performance. And for -- especially for OLED monitors, it is also expected to see continued steep growth compared to other businesses. So we will continue to effectively respond to market trends and also reach an optimal production share between TVs and monitors to continue to expand our business performance. And again, for the short term, this year, there is some positivity expected from some sporting events. But at the same time, some side effects are also expected, especially coming from the supply-demand situation of components, especially semiconductor. So for the company, as we look ahead to continued market growth, our priority lies in securing stability in our production as well as supply. Now for our large panel business, we expect the competition to continue to intensify and it is incumbent upon us to continue to strengthen our technology and also differentiate our products so that we can keep expanding our business performance. So to that end, we will continue to work closely with our customers in close partnership to make sure that we can bring about win-win to all the companies involved with improved profitability. So we will continue to discuss our strategy to that end with our customers.