LG Display Co. ((LPL)) has held its Q1 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
LG Display Co. recently held its earnings call, revealing a mostly positive sentiment driven by significant revenue growth and sustained profitability. The company’s strategic focus on OLED-centric upgrades and a robust performance in the auto business were key highlights, despite challenges such as area shipment declines, average selling price (ASP) drops, and uncertainties in global trade.
Significant Revenue Growth
LG Display reported a solid revenue of KRW 6,065.3 billion, marking a 15% increase year-over-year. This growth was primarily driven by OLED-centric business structural upgrades and favorable foreign exchange impacts, underscoring the company’s strategic shift towards more advanced display technologies.
Sustained Profitability
The company achieved an operating profit of KRW 33.5 billion, which signifies an improvement of KRW 509.2 billion year-over-year. This marks a continuation of the profit streak initiated last quarter, highlighting the effectiveness of LG Display’s strategic initiatives.
OLED Business Expansion
OLED products have become a cornerstone of LG Display’s revenue, with their contribution increasing by 8 percentage points year-on-year to account for 55% of total revenue. This growth reflects the success of the company’s transformation towards OLED-centric operations.
Strong EBITDA Performance
In the first quarter, LG Display’s EBITDA reached KRW 1,231.3 billion, with an EBITDA margin rate of 20%, the highest since Q3 of 2021. This robust performance underscores the company’s operational efficiency and strategic focus on high-margin products.
Strategic Large Panel OLED Focus
Following the discontinuation of its LCD TV business, LG Display is concentrating on OLED-centric structural upgrades. The company expects positive performance from differentiated products such as gaming monitors and Gen 4 OLED TVs, which are anticipated to drive future growth.
Auto Business Growth
The auto segment has seen an increase in revenue mix, with LG Display planning to strengthen its market leadership through a differentiated product and technology portfolio. This includes innovations like plastic OLED and high-end LTPS LCD, aimed at enhancing its competitive edge.
Area Shipment Decline
The first quarter saw a 19% decline in area shipment quarter-on-quarter, attributed to seasonal impacts on mid- to larger panels. Despite this, the company managed a 1% year-over-year increase, buoyed by OLED TV and notebook panel shipments.
ASP Per Square Meter Drop
The average selling price per square meter dropped to $804, an 8% decline quarter-on-quarter. However, robust OLED performance helped mitigate the impact of this decline, showcasing the resilience of LG Display’s OLED strategy.
Uncertainties in Global Trade
LG Display faces heightened uncertainties in the downstream market and shifts in the global trade environment, including potential impacts from U.S. tariffs. These factors pose challenges that the company must navigate in the coming quarters.
Decline in LCD Business
With the sale of its Guangzhou LCD TV plant, LG Display anticipates a decline in large panel revenue starting in Q2, as LCD TV revenue will no longer be captured. This marks a significant shift in the company’s business model towards OLED technologies.
Forward-Looking Guidance
Looking ahead to Q2, LG Display anticipates a mid-20% decline in area shipment following the discontinuation of its LCD TV business. However, the company expects the ASP per square meter to rise by around 20%. LG Display plans to maintain its focus on OLED business expansion, cost innovations, and operational efficiency to sustain profitability amidst market uncertainties.
In summary, LG Display’s earnings call painted a mostly positive picture, driven by significant revenue growth and sustained profitability through strategic OLED-centric upgrades. While challenges such as shipment declines and global trade uncertainties persist, the company’s focus on OLED expansion and innovation positions it well for future growth.