Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue in Q2 2024 was KRW6.708 trillion, up 28% Q-o-Q and 42% Y-o-Y.
- Shipment increased in all product categories, with notable growth in OLED products.
- The company's efforts for business structure upgrades are producing tangible results.
- Favorable foreign exchange conditions contributed to earnings improvements.
- Cash and cash equivalents stood at KRW2.342 trillion, indicating strong liquidity.
Negative Points
- Operating loss posted KRW94 billion, representing a significant decline Q-o-Q and Y-o-Y.
- Area shipment of notebook PC and LCD TV products was slightly lower than planned.
- Debt to equity ratio was high at 282%, with a net debt to equity ratio of 151%.
- The market for IT LCD remains slow to recover, with intensifying competition among panel makers.
- There are elements of short-term volatility in the auto business due to reduced incentives for EVs.
Q & A Highlights
Q: What is your outlook on the likelihood of making a turnaround in the third quarter and the estimated size of profit in the second half of the year?
A: (Senior Vice President for Corporate Planning) The company is focusing on making a turnaround and has posted positive results in the first and second quarters. However, market volatility remains high, and several factors, including downstream industry demand, could impact performance. The voluntary retirement program for production workers will also affect Q3 performance. Efforts to upgrade business structure and improve cost efficiency will continue into the second half of the year.
Q: Can you provide updates on the sale of the (inaudible) TV Fab and how you plan to use the sales proceeds?
A: (Sunghyun Kim, CFO) We are considering various options for utilizing non-strategic assets, but no specific decisions have been made regarding the sale of the Fab. Any actions taken will be communicated to the market in due course. The use of sales proceeds will be addressed once everything is settled.
Q: Could you provide some color on the smartphone OLED shipment in the first and second half of the year?
A: (inaudible, in charge of small display planning and management) While we can't provide specifics due to customer confidentiality, the overall smartphone market growth is expected to be slow. However, the plastic OLED-based smartphone market is expected to grow slightly. We have plans and infrastructure in place for timely mass production and stable supply, aiming to increase panel shipment and improve revenue and profits compared to the previous year.
Q: What is your strategy and outlook for the IT LCD market, and how do you see the market situation for each IT application product?
A: (inaudible, in charge of medium display planning and management) Despite the slow recovery and intense competition, we are confident in our high-end product portfolio and stable customer relationships. We are implementing cost-cutting measures and transforming our business structure to be profitable even under current market conditions. The monitor market is expected to grow slightly, while the notebook PC market may be sluggish. Panel prices for IT applications are expected to remain flat year-over-year.
Q: What is your expected timeline for making a turnaround in the large OLED business, and what strategies are you implementing?
A: (inaudible, Vice President of large display planning and management) We expect continued volatility in the TV market. Our efforts focus on product development, operational efficiency, and close cooperation with strategic customers. We are developing differentiated products with better performance and cost competitiveness, enhancing manufacturing efficiency, and expanding high-end lineups. Depreciation of past investments will end in the second half of next year, leading to improved profitability.
Q: What is your overall annual projection for the revenue and growth rate for the auto business in 2024?
A: (inaudible, in charge of auto planning and management) Despite short-term volatility in the EV market, we have a differentiated product and technology portfolio focused on OLED and LTPS LCD. We aim to grow revenue by mid-10% year-over-year and maintain a similar growth rate for our order balance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
