Conference Operator: Good morning and good evening.
LG Display IR: Thank you all for joining the conference call for the LG Display earnings results. This conference will start with a presentation followed by a Q&A session. If you have a question, please press star and 1 on your phone during the Q&A. Now we will begin the presentation on LG Display's second quarter of fiscal year 2026 earnings results.
Kim Kyu-Dong: Hello, I am Kim Kyu-Dong, the financial manager of LG Display. Thank you for attending the conference call for the 2nd quarter of 2026. Today's conference call was attended by CEO Kim Sung-Hyun, CEO Jo Seung-hyun, CEO Kim Jong-deok, CEO Ahn Yoo-shin, CEO Baek Seung-yong, CEO Son Ki-hwan, and CEO Lee Ki-yong.
English Interpreter: Good afternoon. This is Kim Kyu-Dong, Vice President in Charge of Finance and Risk Management at LG Display. Thank you for joining our second quarter 2026 Earnings Conference Call. Joining us today are CFO Kim Sung-Hyun, Vice President Cho Seung-Hyun in charge of Business Control and Management, Vice President Kim Jong-Duk in charge of Large Display Planning and Management, Ahn Yoo-Shin in charge of Medium Display Planning and Management, Vice President Baek Seung-yong in charge of small display planning and management, Vice President Song Ki-hwan, head of auto marketing, and Lee Ki-young in charge of business intelligence. Today's conference call will be conducted in both Korean and English. For more details on the company's performance, please refer to our disclosure which was released just now or the investor relations section in the company website.
Kim Kyu-Dong: Please refer to the disclaimer before we begin the presentation. Today's conference call will be conducted in both Korean and English. The financial figures presented in today's earnings release are consolidated figures prepared in accordance with international financial reporting standards. These figures have not yet been audited by an external auditor.
English Interpreter: and are provided for the convenience of our investors. I will now report on the company's business performance in Q2 2026.
Kim Kyu-Dong: The company's production and shipment for mobile products in Q2 declined due to the seasonality, while shipments of medium and large-sized products increased.
English Interpreter: With the $1 to $2 exchange rate remaining high, revenue in Q2 rose slightly YOY and QOQ to $5.6121 trillion won. However, due to the increase in capacity and efficiency of OLED,
Kim Kyu-Dong: As for P&L in Q2, the company recorded an operating loss.
English Interpreter: Reflecting one-off costs from intensive workforce restructuring. However, with OLED capability stabilizing and company-wide cost reduction efforts continuing, operating performance, excluding one-off costs, was in the black, improving significantly YOY. Even after accounting for seasonality and one-off costs, the company achieved profit for the first half of the year for the first time in five years since 2021.
Kim Kyu-Dong: The operating profit margin was minus 2%, and EBITDA margin 16%. Net income recorded a loss of
English Interpreter: 418.8 billion won due to the impact of FX translation loss as the exchange rate continued its rise from the previous quarter.
Kim Kyu-Dong: Next is area shipment and ASP trends.
English Interpreter: The second quarter area shipment grew by 12% from the previous quarter to 3.6 million square meters, resulting from an expansion in shipments of medium and large size products, despite some changes in the product mix.
Kim Kyu-Dong: The fall in mobile product sales decreased by 13% compared to the previous year and recorded $1,079.
English Interpreter: Price per square meter fell 13% QOQ to $1,079 following the seasonal decline in shipments of mobile products which command relatively higher price per square meter. Next, I will discuss the revenue breakdown by product category.
Kim Kyu-Dong: TV accounted for 21% of total revenue, IT 36%,
English Interpreter: Mobile and others, 32%, and auto, 10%. Mobile and others, 32%, and auto, 10%. In the large-sized segment, which includes OLED TVs as well as OLED gaming monitors, TVs' share out of revenue rose by 5 percentage points thanks to increased shipment. Mobile and others declined by 5 percentage points from the previous quarter due to OLED's seasonality.
Kim Kyu-Dong: OLED's share out of revenue was 57%, increasing slightly YOY. The process of upgrading our business structure, for example, expanding the OLED business and strengthening the company's fundamentals and competitiveness,
English Interpreter: is still underway as planned, and its benefits are expected to become increasingly evident over time.
Kim Kyu-Dong: Next is financial position and key metrics. Cash and cash equivalents in Q2 was 1.452 trillion won, slightly down QOQ. Debt-to-equity ratio stood at 260%, and the net debt-to-equity ratio at
English Interpreter: 156%. Exchange rate volatility associated with the high exchange rate has partly affected these financial ratios, but our work to achieve long-term financial stability continues unchanged. Next is Guidance for Q3.
Kim Kyu-Dong: For Q3, shipments of large and mobile OLED products are expected to increase
English Interpreter: Due to the positive seasonality, but the total area shipment is expected to rise by mid-single-digit percent QOQ on the heels of some pull-in effect in Q2 and the ongoing optimization strategy of our ITLCD portfolio. As for the price per square meter, it is expected to rise by a high 10% level, driven by shipment expansion thanks to the mobile OLED seasonality.
Kim Kyu-Dong: I will now turn the call over to our CFO, Kim Sung-Hyun. Yes, hello. This is CFO Kim Sung-Hyun.
Kim Sung-Hyun: Thank you for joining us at this conference call.
English Interpreter: Good morning and afternoon. This is the CFO, Kim Sung-Hyun. Thank you for joining us at this conference call.
Kim Sung-Hyun: First, I would like to talk about the performance of the second quarter. In the second quarter, due to the impact of sports events and so on, due to the increase in attendance in the medium-sized product group, there was a favorable exchange rate, but due to the traditional mobile IPC,
English Interpreter: Allow me to first discuss our Q2 results. In Q2, shipments of medium to large products increased thanks to pull-in effects from sporting events, etc., as well as a favorable exchange rate. But it ended in operating loss in Q2 owing to the decline in mobile panel shipment due to the traditional seasonality and one of costs from previously announced workforce optimization.
Kim Sung-Hyun: But our core business profitability, excluding one of cost, remained in the black.
English Interpreter: Achieving an improvement of over 100 billion won in the first half, YOY. We were able to minimize the impact from seasonality and one-off costs in the first half thanks to the upgrade to OLED-centric business structure based on technological leadership.
Kim Sung-Hyun: To be more specific, the company has been actively promoting high-frequency cost reduction activities To be more specific, we have been undertaking rigorous and ongoing cost reduction initiatives company-wide
English Interpreter: To strengthen competitiveness. Not only that, there were parallel efforts toward yield improvement, profitability-focused product portfolio adjustment, and revenue expansion through partnerships with global customers, which created the foundation to deliver strong results despite the uncertain external environment.
Kim Sung-Hyun: In the second half of the year, there will continue to be external uncertainty and change in the domestic economy,
English Interpreter: Although external uncertainties and macroeconomic volatility will persist in the second half, the company plans to continue strengthening our competitiveness around two pillars, securing top-tier technology and advancing cost innovation based on technology.
Kim Sung-Hyun: In particular, beyond simple cost cutting,
English Interpreter: We will maximize efficiency across the entire process from development to manufacturing through AI and digital transformation centered on AX-driven technological innovation. Such production capability enhancement is expected to fundamentally improve the company's structure and drive growth based on differentiated customer value.
Kim Sung-Hyun: These efforts will ultimately result in fundamental competitiveness, encompassing cost advantage, differentiation, and concentration.
English Interpreter: and will be instrumental in building a business structure that generates sustained long-term profits.
Kim Sung-Hyun: The company believes that it is essential to achieve a technology-based strategy and create synergy by securing the core value among the elements that make up the competitive potential. Therefore, we will continue to promote the optimization of the core value and the technology-based strategy as our top priority,
English Interpreter: Among the elements that constitute fundamental competitiveness, we believe the most essential is to secure cost leadership to create synergy with our technology differentiation strategy. Accordingly, we will keep prioritizing cost optimization and technology-driven differentiation across the company along with flexible targeted allocation of resources as circumstances require to generate stable returns.
Kim Sung-Hyun: Furthermore, we will use the resulting stable profits
English Interpreter: to strengthen our financial position and leverage that stronger financial base as the catalyst for future growth, thereby completing a virtuous cycle that solidifies our market position.
Kim Sung-Hyun: I will now briefly outline our plans and strategies for each business area. Chul-Dong Jeong, Sang Ho Song, Yong Min Ha
English Interpreter: For large OLED, we will strengthen our premier market leadership and expand performance with a product lineup that combines differentiated technology and cost competitiveness. As the monitor market increasingly shifts from LCD to OLED, We plan to capitalize on the unique strengths and differentiators of our large W OLED to reinforce high-value product lines like gaming OLED monitors and increase shipments.
Kim Sung-Hyun: We plan to maximize our competitiveness by focusing on high-end products by focusing on high-end products. We plan to maximize our competitiveness by focusing on high-end products
English Interpreter: For small and medium displays, we will focus on differentiated competitive technologies and strengthen competitiveness based on high-end products. We will also leverage our stable system of technology development and mass production to respond flexibly to market changes.
Kim Sung-Hyun: We will pursue profitability through new technology development, yield improvement, and cost minimization while striving to deliver unique value to customers and consumers. The automotive market is growing faster than other display segments and is thus more competitive.
English Interpreter: We will leverage our differentiated product and technology portfolio to lead market share and continuously strengthen our position. Building on these initiatives, we will strive to deliver tangible results in the second half of the year. Along the same line, we will continue driving annual performance improvements by upgrading our cost innovation and strengthening business competitiveness to solidify a stable profit structure.
Kim Sung-Hyun: Last is our investment strategy. We remain focused on developing differentiated technologies across all product lines to secure future competitiveness and achieve fundamental cost innovation.
English Interpreter: We remain focused on developing differentiated technologies across all product lines
Kim Sung-Hyun: Having said that, large-scale investments that lead to mass production require various conditions such as demand visibility, confidence in market growth,
English Interpreter: and discussions with customers. To use our limited resources efficiently, we are carefully evaluating cost competitiveness, investment costs, technological advantages, and the likelihood of securing stable returns.
Kim Sung-Hyun: Thank you.
English Interpreter: CapEx spend in 2026 is expected to be in the mid-to-high 2 trillion won range. Going forward, our investment decisions will be made at the optimal balance point, taking into account the company's financial position and long-term competitiveness. Thank you very much for your attention.
Kim Kyu-Dong: This is the end of the report on the main results of the second quarter of 2026. This concludes our presentation of business highlights for Q2 2026. We will now take your questions.
English Interpreter: Operator, please commence the Q&A session.
Conference Operator: If you want to cancel the questions, you can press the star and number 2. For the sake of a smooth meeting, please ask questions within two questions per person. Now Q&A session will begin.
LG Display IR: Please press star 1, that is star and 1, if you have any questions. Questions will be taken according to the order you have pressed the number star 1. For cancellation, please press star 2, that is star and 2 on your phone. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant. The first question will be provided by Won Seok Jeong from M Securities. Please go ahead with your question.
Jung Hoseok: Hi, I'm Jung Hoseok from I.M. Thank you for your questions. I have two questions for you. First of all, there was a pre-entry demand in the second quarter. When considering those things, please tell us how the business performance was in detail when you excluded the one-day cost and when you excluded the one-day cost. Also, I would like to ask if there are any changes in the flow of the year compared to what was planned in the beginning of the year. Secondly, I think that the fall of the smartphone panel will be expanded as the seasonal maturity enters from the third quarter. Thank you for taking my questions. I have two. The first is that there has been some pull in demand in the second quarter.
English Interpreter: So considering such pull-in demand, then my question is on the amount of one-off costs incurred in Q2 and the operating performance excluding those one-off costs. And also, I wonder whether there are any changes to the company's full-year outlook compared to the start of the year. And the second question is, the positive seasonality is starting in the third quarter. And along with that, it is likely to drive up the smartphone panel shipments. But there are also some potential risks, such as weak IT device demand and heightened macroeconomic volatility. So what is the company's strategy to expand revenue and improve profitability in the second half?
Kim Sung-Hyun: Yes, this is Kim Sung-Hyun from CFO. I've already mentioned this at the last presentation. Considering this as the last one, rather than the previous packages, we would like to have a package that can be accepted by the market and our customers. We would like to have a package that has a larger scale and conditions
English Interpreter: This is the CFO responding to your question. Now, as had been announced earlier, we had undertaken the program as if this was going to be our last time. So in terms of the size, from the perspective of the market and also from the perspective of the employees, So it ended at $240 billion won. In one-off expense that was reflected into our second quarter.
Kim Sung-Hyun: As I said at the 1st quarter performance presentation, except for this, I have said that I will definitely achieve the business results in black. But in the end, half of these results mean that over the past five years, As I had announced in the first quarter earnings release call, I did commit that excluding such one of cost, I was determined to see that our business performance was going to be seeing profit
English Interpreter: What this achievement means is that actually one of the problems of the company had been our chronic suffering of losses in the second quarter for the past four years.
Kim Sung-Hyun: I think we have achieved what we had planned until the second quarter. As a result, we have achieved two things, technical leadership and price innovation. I think we need to continue to work on this. We need to continue to work on the intensity and accuracy.
English Interpreter: So what this means is that excluding the one of cost, we were able to put an end to the chronic losses that we had been suffering in the second quarter until now. And now the company believes that everything that we had planned for the second quarter this year What do you expect from the third quarter?
Kim Sung-Hyun: And you asked about the strategy. As you, investors, know very well, the company has a structure that achieves almost all of its results in the third and fourth quarter. There are too many uncertainties in the third quarter of this year. The semiconductor issue, The second part of your question was about the third quarter outlook as well as the company's strategy.
English Interpreter: As the investors would be fully aware, our structure is such that we achieve pretty much all of our performance for the year in the third quarter and the fourth quarter. But now, in the third quarter of this year, what is unique is the fact that there are so many uncertainties, much more than usual. For example, the semiconductors, geopolitics, and also the rise in the commodity prices as a result of this. and all of them combined into the macroeconomic uncertainties as well.
Kim Sung-Hyun: However, we will try our best to achieve the business results we have planned based on competitive cost reduction activities and various technical values.
English Interpreter: Now, despite that, the company will continue to try to achieve competitive cost cutting and provide the kind of technological value that is expected of us, meaning that we will continue to do our best to achieve the kind of business performance that we had planned for.
Kim Kyu-Dong: We will take the next question.
LG Display IR: The following question will be presented by Sung-Kyu Kim from Daiwa Securities. Please go ahead with your question.
Sung-Kyu Kim: Yes, hello. Thank you for the question. I have a question for Daeyoung Panel. Following 2025, I think the Daeyoung Panel business will record stable profits in the first half of this year. I'd like to ask you about the future prospects for mid-term revenue. Recently, mid-term competitors such as RGV, Minio, and LED have increased their premium products, and the price competition has also increased considerably. I'd like to know what the White OLED TV strategy is for maintaining high-end TV occupancy. As Chef Ho mentioned earlier, the high-end gaming monitor market seems to be growing rapidly. As a result, I think it will contribute to the performance of the whole WLED output and demand, focusing on OLED monitors using wide OLED.
English Interpreter: Thank you for taking my questions, which are on the large-size panel. Now, it appears that the large-size business is going to post stable operating profit margin in the first half of 26, following 25. So what is the company's profitability outlook for the second half of the year? And this is because with the greater China region suppliers improving premium products like RGB mini LED and becoming more price competitive, what is the company's wide OLED TV strategy to maintain high-end TV share? And another question is, this was also mentioned by the CFO, but then The high-end gaming monitor market is growing fast, and the wide OLED-based OLED monitors seem to be driving higher wide OLED shipments and strong results. So what is the current status of the OLED monitor business and also the company's mid-to-long-term capacity strategy?
Kim Jong-Duk: I'm Kim Jong-daek, the head of the acting management department. As mentioned earlier, the cost of raw materials and semiconductor-based parts is rising. As the World Cup is coming to an end, we need to continuously monitor the uncertainty of demand in the second half of the year. Therefore, in the second half of the year, we will continue to promote high-strength
English Interpreter: This is Kim Byung Deuk of the Large Display Planning and Management responding to this question. The market situation in the second half will be challenging due to the rising material costs like semiconductor components. And also, with the World Cup coming to an end, the demand uncertainty in the second half is likely to be there, so we will continue to monitor the situation very closely. So we will continue rigorous cost innovation efforts and production technology improvement to overcome the difficult market environment.
Kim Jong-Duk: Second, in terms of competition, Chinese competitors IZB Mini-LED TV is doing an aggressive promotion, and the competition is getting worse in the high-end segment. The company is actively demanding the technical discrimination factor, which is a unique strength of WhiteHole Red. The company is continuously strengthening the high-end brand line-up with global leading set-up companies, And as for competition, yes, there have been aggressive promotions of RGB mini LED TVs by greater China suppliers, and that has intensified competition in the high-end segment.
English Interpreter: So the company will actively promote white OLED's unique strengths and technological differentiators and also strengthen high-end brand lineups with leading global set makers and expand mid- to low-end OLED TV offerings with the goal of solidifying our large-size business and white OLED technology leadership.
Kim Jong-Duk: I'd like to talk about the monitor. The market for other IT products is quite good. So the OLED monitor market for high-end gaming monitors is changing from LCD to OLED faster than we thought. As a result, the market is growing at a meaningful level. In terms of self-sufficiency, the OLED monitor ratio is expected to be around 10% in the previous year and 20% this year. And for monitors, the market has been relatively strong versus other IT products. In particular,
English Interpreter: OLED Monitor is showing meaningful growth as the high-end gaming monitor market rapidly shifts from LCD to OLED. We expect the share of OLED monitors within our large-size shipments to rise from the low 10% level last year to about 20% this year, with meaningful growth projected for next year as well. We will focus on product and customer strategies that optimize the TV and monitor production mix to maximize business performance and opportunities.
Kim Jong-Duk: Lastly, in terms of medium-term KEPA operation, we will maximize KEPA by maximizing KEPA by maximizing KEPA by maximizing KEPA by maximizing KEPA by maximizing
English Interpreter: And last, for the mid-to-long-term capacity operations, as I mentioned earlier, given the changes in the money-to-market and also in cooperation with the global set makers, we will leverage improved market responsiveness to make full use of our existing capacity and actively respond to demand.
Kim Kyu-Dong: Next question, please.
LG Display IR: The following question will be presented by Jung Hyun Yoon from UBS Securities. Please go ahead with your question.
Jung Hyun Yoon: First of all, the price of the IT set due to the rise in semiconductor prices seems to be appearing in earnest, but I think this could be a risk factor in the second half of the year. I would appreciate it if you could share with us the outlook on the demand in the second half of the year and whether there will be any difference in the profitability of your goal. Second, it seems that the investment and sales of the IT LCD business are decreasing continuously. Thank you for taking my questions. I also have two questions regarding the mid-size panel business.
English Interpreter: Now, it appears as if the IT set prices are rising due to higher semiconductor costs, which could be a risk in the second half. So what is the company's outlook on the second half demand, and does the company foresee any potential risks to achieving your target profitability? And the second question is, with the IT LCD sales and shipments declining, and also with the mainstream customers appearing to be moving away from LCD toward OLED, what is the company's mid-to-long-term IT LCD FAB operation strategy and IT OLED business strategy?
Ahn Yoo-Shin: I'm Ahn Yoo-Shin, CEO of Jung-Yeong Project Management. I'd like to answer your question. With the increase in the price of parts, such as chip relations, and the increase in the price of sets, Thank you. This is Ahn Yoo-Shin in charge of medium display planning and management responding to these questions. Now, with the rising component costs such as semiconductors and the consequent IT set price hikes,
English Interpreter: These factors make the second-half demand highly uncertain. To prepare for demand declines and intensify competition, we are trying to secure supply flexibility and closely monitoring the market.
Ahn Yoo-Shin: In the second half of the year, we will further strengthen the customer structure of the high-end center based on long-term customer-to-customer relations and focus on high-end differentiated products. In the second half, building on long-standing customer trust, we will further refine our customer mix toward high-end accounts
English Interpreter: The IT OLEDs that you have asked for are a good example of how to use the existing PAPs to secure
Ahn Yoo-Shin: I will actively review more competitive approaches such as utilizing existing fabs to secure fundamental competitiveness and run our fabs more efficiently.
English Interpreter: We will take one last question.
LG Display IR: The last question will be presented by Hyunwoo Park from Shinhan Investment and Securities. Please go ahead with your question.
Hyunwoo Park: Thank you for your question. I would like to ask two questions related to Soyoung. First, the number of self-sufficiency points in the smartphone market is constantly rising. In order to respond to the increasing demand, Thank you. I have a couple of questions about the small size business.
English Interpreter: The company's panel share in the smartphone market has been steadily increasing. So what is the company's plan for additional investment to meet rising demand, and what strategies and preparations are in place to secure technological leadership? And the second question is, it appears that the handset maker's cost burden continues to rise. So if set price hikes lead to an accelerated decline in panel ASPs, So what is the company's outlook and what measures will you take to mitigate the risk, if at all? Thank you. This is Baek Seung-yong in charge of small display planning and management responding to the questions. The company is steadily increasing our smartphone panel market share based on overwhelming technological competitiveness and product reliability. To meet rising demand in a timely manner, we will not only utilize our existing production infrastructure efficiently, but also carefully review and execute preemptive investment in new technologies.
Baek Seung-Yong: The issue of the rise in the price of parts in the global industry is recognized by the entire industry, and the company is also fully aware of its concerns. As a result, the company has increased the cost of technology-based raw materials, There are some concerns about the rising component costs and the macro changes
English Interpreter: which is actually affecting the industry on the whole and we do recognize that there are such concerns. Accordingly, we will sustain solid profitability through cost innovation across production and operations while contributing to customers' new model competitiveness through timely development of new technologies. By doing so, we hope to further strengthen the technological barrier to entry into these smartphone panels.
Kim Kyu-Dong: This concludes LG Display's Q2 2026 Earnings Conference Call. We thank everyone for joining us today. Should you have any additional questions, please contact the IR team. Thank you.
