LG Display Co., Ltd. Q2 FY2026 earnings call

• Overall Q2 Performance

  • Mobile product production and shipments declined due to seasonality, while shipments of medium and large-sized products increased.
  • The company achieved a half-year profit for the first time in five years (since 2021) even after accounting for seasonality and one-off restructuring costs.
  • Excluding one-off workforce restructuring costs, core business operating performance was profitable, with a more than 100 billion won YOY improvement in the first half.

• Strategic Priorities

  • The company continues its planned business structure upgrade to expand the OLED business and strengthen core competitiveness, with benefits expected to become increasingly visible over time.
  • Two core strategic pillars are securing top-tier technology and advancing technology-based cost innovation. Beyond traditional cost cutting, the company is leveraging AI and digital transformation (AX-driven innovation) to improve efficiency across product development and manufacturing, to fundamentally improve business structure and drive growth.
  • The top priority continues to be securing cost leadership to create synergy with the company's technology differentiation strategy, with flexible targeted resource allocation to deliver stable returns. Stronger profits will be used to improve the company's financial position, creating a virtuous cycle for long-term growth and market position.

• Segment-Specific Strategies

  • Large Displays: Strengthen premium market leadership for large OLED, including OLED TVs and OLED gaming monitors, by combining differentiated technology and cost competitiveness. Capitalize on the ongoing industry shift from LCD to OLED to grow high-value product lines.
  • Small and Medium Displays: Focus on differentiated competitive technologies and high-end products, leveraging stable R&D and mass production systems to flexibly respond to market changes. Pursue profitability via new technology development, yield improvement, and cost minimization.
  • Automotive Displays: Leverage the company's differentiated product and technology portfolio to grow market share in the fast-expanding automotive display segment, which is growing faster than other display categories.

• Investment Strategy

  • The company remains focused on developing differentiated technologies across all product lines to secure future competitiveness and deliver fundamental cost innovation.
  • Large-scale mass production investments will be carefully evaluated based on demand visibility, market growth confidence, customer discussions, cost competitiveness, investment costs, technological advantage, and return potential to efficiently allocate limited resources. 2026 capital expenditure is expected to land in the mid-to-high 2 trillion won range.

Total consolidated Q2 2026 revenue was 5.6121 trillion won, up slightly year-over-year (YOY) and quarter-over-quarter (QOQ). The company reported an operating loss with a -2% operating margin, and a 16% EBITDA margin. Excluding one-off restructuring costs, operating performance was positive and improved significantly YOY. Net loss was 418.8 billion won, driven by foreign exchange translation losses. Total area shipment grew 12% QOQ to 3.6 million square meters, while average price per square meter fell 13% QOQ to $1,079 due to product mix shifts.

Segment revenue breakdown:

• TV: 21% of total revenue (up 5 percentage points QOQ, driven by higher shipments of medium and large products)
• IT: 36% of total revenue
• Mobile and others: 32% of total revenue (down 5 percentage points QOQ due to mobile seasonality)
• Auto: 10% of total revenue

OLED products accounted for 57% of total revenue, increasing slightly YOY.

• Q3 2026: Shipments of large and mobile OLED products are expected to increase due to positive seasonality. Total area shipment is projected to rise by a mid-single-digit percentage QOQ, constrained by pull-in demand from Q2 and ongoing IT LCD portfolio optimization. Average price per square meter is expected to rise by a high 10% level driven by expanded shipments of higher-priced mobile OLED products.
• Full-year 2026: No change to the original full-year plan outlined at the start of the year, and management remains committed to achieving the originally planned business performance. No upward or downward revision to the full-year outlook was announced.

• Persistent external macroeconomic uncertainty and volatility in the global economy during the second half of 2026, driven by factors including semiconductor supply issues, geopolitical tensions, and rising commodity prices.
• Rising raw material and semiconductor component costs that increase production costs and push up end-product prices, which can dampen consumer demand.
• Intensified competition in the high-end display segment, particularly from greater China suppliers that have improved premium offerings (such as RGB mini-LED products) and engaged in aggressive pricing and promotion.
• Post-sports event demand uncertainty following the Q2 pull-in for sporting events, with projected softening demand after events conclude.
• Weak broad-based demand for IT devices, which could pressure overall revenue and profitability.
• Ongoing foreign exchange rate volatility, which has impacted net income and financial leverage ratios.

Q: What was the size of Q2 2026 one-off costs, what is operating performance excluding these costs, are there any changes to the full-year outlook, and what is the company's strategy for the second half amid weak IT demand and macro volatility? / A: The total one-off workforce restructuring cost recorded in Q2 was 240 billion won. Excluding this cost, the company returned to profitability in Q2, ending a multi-year streak of chronic Q2 operating losses. The company has hit all planned Q2 targets year-to-date, and there are no changes to the original full-year outlook. While there is higher-than-usual uncertainty in H2, the company will continue rigorous cost-cutting and deliver differentiated technological value to meet its original performance targets.

Q: What is the large-size panel profitability outlook for H2, what is LG Display's strategy for white OLED TVs amid rising competition from Chinese mini-LED products, and what is the status and capacity plan for the growing OLED gaming monitor business? / A: H2 large-panel profitability faces headwinds from rising component costs and post-event demand uncertainty, so management will continue aggressive cost innovation and production technology improvements to offset these challenges. To compete with aggressive Chinese mini-LED promotions, LG Display will highlight white OLED's unique technological differentiators, expand high-end OLED TV lineups with leading global set makers, and add mid-to-low-end OLED TV offerings to solidify technology leadership. OLED monitor penetration in LG Display's large shipments is expected to double from ~10% in 2025 to ~20% in 2026, with continued growth projected for 2027. Management will optimize the production mix between TVs and monitors to maximize performance, and will use existing capacity with flexible demand responsiveness aligned with partner demand.

Q: How will rising semiconductor-driven IT set price hikes impact H2 demand and profitability targets, and what is the mid-term strategy for the declining IT LCD business and growing IT OLED business? / A: Rising semiconductor and component costs that push up end-product prices have created significant H2 demand uncertainty. To prepare for potential demand declines and intensifying competition, the company is maintaining supply chain flexibility and closely monitoring market trends, while shifting its customer mix further toward high-end accounts to protect profitability. For the IT LCD business, the company will continue optimized, efficient operation of existing fabs, while reviewing competitive approaches to leverage existing fab capacity to build fundamental competitiveness for the growing IT OLED business.

Q: As smartphone panel market share grows, what are your plans for additional capacity, and how will you offset risk from accelerating ASP declines driven by rising handset maker cost burdens? / A: LG Display will grow smartphone panel share based on technological competitiveness and product reliability, meeting rising demand by efficiently utilizing existing production infrastructure, and will carefully review and execute preemptive investment in new technologies as needed. Management recognizes industry-wide cost pressure from rising component prices, and will sustain solid profitability via company-wide production cost innovation, while delivering timely new technology development to support customers' new model competitiveness and strengthen technological barriers to entry.