Vertical Divider

LG Display’s 4th Quarter Margins Improve But Revenue Down Y/Y 
February 04, 2019
 
LG Displayreported 4Q results of 6.95t won, up 14% sequentially but down 2.5% Y/Y. Gross margin was 17.0%, up Y/Y and sequentially from 14.6% and 12.3% respectively.  The operating margin was 4%, up sequentially and Y/Y from 2.3% and 0.6% respectively.  LGD reported a blended ASP up 12% sequentially with area shipments essentially flat a result of a shift in product mix, away from TV and monitor panels, and toward notebook, tablet, and mobile panels, which carry a higher ASP/m2.  TVs reached a three year low of 36% of total revenue as LG shifts from unprofitable LCDs to OLEDs. 
 
1Q GUIDANCE
 

• Area shipments down high single digits due to slowing LCD TV panel shipments 
• Blended ASP down mid to high single digits 
• Concerns about macro issues (global slowdown), 
  • Trade Issues, FX
  • Must factor in each supplier and product size – Could be a reference to Samsung Display’s QD/OLED conversion, but is more  likely a 2020 issue. 
  • Market Outlook – Concerned about a second year of double digit capacity growth from Chinese suppliers 
• OLED Revenue expected to be ~30% of total in 2019 and 50% in 2021; the majority of which is TVs 
• Capex
  • 8t won in 2019 -- ($7.15b US)
  • 4t won in 2020
  • Financing
    • Have 3t for China fab secured 
    • Have plans for additional capital (borrowing?) if cash flow is insufficient 
•  Flexible OLED Outlook
  • “Based on consumer demand” 
  • Expect Automotive POLED revenue this year 
  • Breakeven? – unknown  
• TV shipments
  • 3.8m OLED TV panel shipments in 2019 up ~1m Y/Y
  • OLED TV business, which turned profitable last year continues to improve
• Negative outlook on the LCD business, but a diverse customer base can withstand further panel price erosion in the near-term.  

 
Q&A
 

• Impact of Samsung Display’s QD/OLED project. “It will enlarge the eco-system” 
• How do you compete with the efficiency of Gen 10 fabs? MMG (Multi-mode production for 65” TV panels; adding 8K OLED panel production
• Plastic (flexible) OLED – LGD’s outlook for flexible OLED in the smartphone market is 14% this year, up from 10% last year 
• LG’s OLED Capacity 
  • WOLED (TV) capacity 70k/month now – E3 & E4 fabs
  • WOLED to increase via China OLED fab by 60K in 3Q 
  • Flexible (small panel mostly) capacity – Currently 45,000 sheets (Gen  6), includes the E5 fab and half of E6, which is both rigid and flex.
• China fab will add another 30,000 flex sheets, but not until 2020 –
• Plans have not changed although they made no mention of a Gen 10.5 OLED fab.