Good morning and good evening. 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 one on your phone during the Q&A. Now we will begin the presentation on LG Display's third quarter of fiscal year 2026 earnings results.
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Good afternoon. This is Kyu Dong Kim , Vice President in charge of Finance and Risk Management at LG Display. Thank you for joining our third quarter 2026 earnings conference call. Joining us today are CFO Sunghyun Kim, Vice President Cho Seung-hyun in charge of business control and management, Vice President Duck Yong Kim in charge of large display planning and management, Yoo-shin Ahn in charge of medium display planning and management, Vice President Baek Seung-ryong in charge of small display planning and management, Vice President Son Ki-hwan, head of auto marketing and product planning, and Lee Ki-young in charge of business intelligence.
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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 or the investor relations section in the company's website.
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Please refer to the disclaimer before we begin the presentation.
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Please be informed that 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 and are provided for the convenience of our investors.
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I will now report on the company's business performance in Q3 2026.
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Revenue in Q3 was KRW 6.277 trillion. In this somewhat unfavorable environment, especially with the strong Korean won, the company was able to grow shipment, thanks to the start of seasonality for major OLED products like large size and mobile. Revenue grew 12% QoQ, fell 10% YoY, mostly due to the shipment decrease of mid-sized LCD products as a result of our portfolio realignment centered on profitability.
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Operating profit was KRW 250.6 billion, slightly improving QoQ and falling 42% YoY. As I just explained, shipment of large size and mobile OLED products grew, but the won to dollar exchange rate fell by 6%, and the chipflation constrained our effort to manage ASP. Prices also rose for some sets, dampening demand for some of our focused high-end products.
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Operating profit margin was 4% and EBITDA 19%. Net income stood at KRW 755.6 billion, thanks to the vast improvement in FX translation gain following the won's appreciation near the quarter end.
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Next is area shipment and ASP trends.
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Third quarter area shipment grew 4% from the previous quarter to 3.7 million square meters as shipment of large-sized OLED products grew despite prolonged uncertainties in the external environment.
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Price per square meter rose 16% QoQ to $1,250, thanks to growth in shipment of mobile OLED products despite the unfavorable external environment, including the chipflation.
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Next, I will discuss the revenue breakdown by product category.
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With the start of seasonality, shipment of mobile products grew, increasing its share out of revenue to 42%, up by 10 percentage points QoQ, which was also the biggest change among all product categories. In contrast, shipment of IT fell, with its share declining to 29%, down by 7 percentage points. TV and Auto's share remained largely unchanged.
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Even as external uncertainties and volatility continue, the company is carrying on our work to upgrade our business structure centered around OLED, which is gradually increasing OLED's share out of total revenue. As of Q3, OLED's share stood at the highest quarterly level of 67%, up 10 percentage points QoQ and 2 percentage points YoY.
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Next is financial position and key metrics. Cash and cash equivalents in Q3 was KRW 1.5097 trillion , slightly up QoQ. The debt to equity ratio stood at 254% and the net debt to equity ratio at 141%, both improved from the previous quarter.
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Next is guidance for Q4.
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Area shipment is expected to grow around 10% in Q4. Continuing from the previous quarter, seasonality will keep driving shipment, but there is still some impact from the advanced purchase that was made in the first half, as well as uncertainties in set demand due to the chipflation, which merits continued close monitoring over the market.
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As for the ASP, with softer consumer demand and external uncertainties such as chipflation and rising prices of raw materials, any increment is not likely to be significant. Price per square meter in Q4 is expected to rise by low single percentage compared to the previous quarter.
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I will now turn the call over to our CFO, Sunghyun Kim.
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Good morning, and afternoon. This is the CFO Sunghyun Kim. Thank you for joining us at this conference call.
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Allow me to briefly walk you through our Q3 highlights. Even while external uncertainties continued, such as the exchange rate, component price fluctuations, and slowing demand for IT products, including high-end, the company was able to improve our performance over the previous quarter, thanks to improved business competitiveness based on OLED and higher operational efficiency.
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The chipflation is driving up the price of sets across industry, and demand is particularly slowing for high-end products, which are the company's strength. In this environment, what we see as a way to ensure profitability is to keep innovating cost to offset the chipflation and seamlessly develop and upgrade technologies that set us apart, and that can help us maintain our competitive edge.
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As part of this strategy, we keep upgrading the productivity and efficiency of our existing infrastructure while developing leading-edge technologies that will keep our distance from the pack and become our future growth engines.
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As was reported by the media recently, the company remains focused on technological innovation, evidenced by the successful development of the next generation OLED patterning technology, or FLiPP. FLiPP is the culmination of the evolution of our OLED technology and mass production experience. We see it as the next gen technology that will broaden OLED's applicability and technological leadership. The company remains committed to heightening our technological competitiveness based on our proprietary technology and accumulated know-how to translate them into real business performance.
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We will keep working to equip ourselves with differentiated technological competitiveness and innovate the cost structure to enhance our readiness against external changes and ensure stable profit generation.
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Let me now briefly outline our strategy for each business area.
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In large panel, the company continues to lead the premium market based on our proprietary OLED technology and product competitiveness. We will keep strengthening our premium TV OLED products while broadening the lineup of price-competitive products to accommodate diverse customers' needs. Meanwhile, in monitor OLED, we will boost our gaming OLED product lineup with our unique technology and widen our presence in the market.
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In small and medium displays, we plan to keep up our competitiveness in high-end products, leveraging our differentiated technological leadership and reliable development and production capability.
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In mobile, we will solidify our market position with our tech competitiveness and reliable supply execution. In IT, we will focus on high value add products while improving cost competitiveness to achieve higher profitability.
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In auto, the environment is challenging with broadly slowing growth in the auto market, moderating transition to EV, and tougher competition among panel suppliers. We will further elevate our business competitiveness by solidifying our position in the premium market with the strategy of improving profitability based on cost innovation.
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Last is on the company's investment strategy.
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The company maintains the strategy of cautiously investing in future technology based on visibility into market demand and close consultation with customers. At the same time, we are also methodically building up our plans for future growth, our future growth engines, and mass production competitiveness by developing new technologies like FLiPP that maximizes the strength of OLED.
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We will keep improving our financial structure while upgrading our leading technology that can help innovate customer value and the display industry.
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Meanwhile, we will make investment decisions at the right time upon careful review of the market and investment environment to lose no time in responding to customers and consumers' needs, and speedily expand our business performance.
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CapEx spend this year is expected at around low KRW 2 trillion . Investment in new OLED technology that we already communicated with the market will move ahead as planned with mass production to begin at the right time.
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Thank you very much.
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This concludes our presentation of business highlights for Q3 2026. We will now take your questions. Operator, please commence the Q&A session.
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Now Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two 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.
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The first question will be provided by Min-kyu Kwon from Kiwoom Securities. Please go ahead with your question.
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Thank you very much for taking my questions. I have a couple of them with regards to the company's new technology. There have been quite a lot of media reports about LG Display's FLiPP technology, which the company also seems to be emphasizing in terms of the technological advantages. My question is with regards to the overview of the FLiPP technology, what would be the investment timing and scale, as well as the mass production schedule utilizing FLiPP, as well as the product applicability and potential customers?
Also, given the fact that some of the peers have already gone into mass production based on the 8.6 Gen technology, what would be FLiPP's advantages over the 8.6 Gen technology? Also, what would be the company's competition strategy to counter the 8.6 Gen? Also, if FLiPP investment were to move fully ahead, then what changes can we expect in terms of the company's medium-term business strategy? In particular, what direction does the company plan to take with the IT LCD?
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This is Ahn Yoo-shin in charge of medium display planning and management. Now, first about the new technology, FLiPP. FLiPP is an RGB OLED patterning method that allows us to use the full sheet Gen 8 mother glass without having to use FMM. It is the next-gen OLED technology, which is the culmination of the evolution in our OLED technology and know-how so far. It also has far stronger advantages over existing approach in terms of product specifications, production process, and cost.
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In terms of product specifications and performance, first, it improves the aperture ratio, which improves brightness, lifespan, and power consumption. It allows individual patterning of RGB, optimizing pixels for each device, maximizing OLED device efficiency, and improving color representation and viewing angle.
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In terms of production, it does not require repeated iteration of alignment and attachment between the mother glass and the FMM. Since it does not use FMM, it goes through the process continuously for each step, which reduces the process time and improves efficiency.
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In terms of cost, we can use the full sheet Gen 8 mother glass, which gives us higher cutting efficiency and productivity. With higher deposition efficiency as well, it offers better material cost.
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In terms of our plans for investment and production of FLiPP, the size or the timing of such investment and production have not been finalized yet. We are preparing for our future OLED business with FLiPP, solidifying our OLED technology leadership and opening up new markets with differentiated customer value.
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A few words about the latter part of your question, which was on the IT LCD. Now, IT LCD business is an area where cost is crucial due to slowing demand and growing competition. We plan to upgrade our product portfolio by focusing on the high-end product needs of our major customers. Not only that, we will recover our business competitiveness here by maximizing our opportunities while keeping an eye on profitability. We will accelerate the work to improve cost and business structure and improve fab efficiency in step with the market.
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Thank you. We'll take the next question.
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The following question will be presented by Kangho Park from Daishin Securities. Please go ahead with your question.
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Thank you for taking my questions. I also have a couple of questions with regards to the company's important business, which is OLED. Now, my first question is, the shipment of large OLED panels seems to be growing fast, led by OLED monitors. And I would like to ask for the company's comments on the company's projection for your shipment for this year and next, as well as profitability. And the second question is, what is the company's mid to long term business and fab operation strategy for large OLED, including the timing of reutilization of part of the capacity in Paju?
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This is Vice President Duck Yong Kim, in charge of large display planning and management, responding to the questions. First, about the large OLED business. The panel shipment for large OLED this year is projected at the high 7 million range, higher by around 20% YoY. Of them, OLED monitor will be about 20%. We plan to maintain meaningful growth into next year as well based on the increase in shipment for OLED monitors. As for profitability, there will be some volatility with downturn in the TV downstream market, chipflation and rising costs in logistics, among others. We will try to secure a stable revenue structure by increasing panel shipment and continuing our cost-cutting initiatives.
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About your second question, our utilization of existing capacity continues to go up following the growth in demand for large OLED panel. We will restart part of the capacity flexibly in proportion to the increment demand while considering the demand intensity in the TV and monitor downstream market and the optimum production ratio. For large business, we plan to go beyond the TV market where we are currently strong. We will broaden our monitor market with the WOLED technology and keep growing our business by maximizing our use of existing infrastructure and resources. We will secure stable volume based on win-win partnership with our customers and further elevate our leadership in large OLED by improving cost and tech competitiveness.
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The following question will be presented by Jonghyun Yoon from UBS. Please go ahead with your question.
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Thank you for taking my questions. I have two questions on the mobile OLED and IT OLED. The first question is about the mobile. The customer's unveiling of the foldable smartphone has escalated expectations in the market and consumers. But for the bar type phone, where the form factor hasn't changed, initial market reaction appears to be subdued. What is the trend in the panel shipment and actual sales that the company is currently seeing? The second question is: now the launch of the foldable also triggered concerns for potential erosion of demand for tablet products. Does the company see foldable smartphones affecting demand for tablets as well?
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This is Vice President Baek Seung-ryong in charge of Small Display, Planning and Management. The foldable is expected to see growing demand, because it provides differentiated value to consumers with a new form factor and addresses the need for larger screens with increasing use of AI. They started the advance reservation for the product on October 16th, and it seems as if the expectations continue to grow. At this time, it appears as if the foldable market or the foldable segment is likely to grow faster than expected.
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It seems as if the foldable market is set to grow, but also at the same time, the bar type is likely to remain the mainstream product as it continues to innovate itself with new technologies. For the company, we will be making the investment according to our plan. We will also keep up with the trends and the demands from the market as well as the consumers, and also keep in line with the next generation evolution so that we can maintain our leadership in the market.
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With the launch of the foldable products, there may be some concerns about its impact on the demand for the tablet at the same time. We do believe that the demand for these different types of products is different. Also, the target customers are different. The projection is that given the fact that the target customers and the purpose of each product segment are different, the impact is going to be limited.
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We will take the next question.
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The following question will be presented by Jung hoon Chang from Samsung Securities. Please go ahead with your question.
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Thank you. I also have two questions. The first is that it's been said that the chipflation has intensified customers' pressure on the panel price. The question is, how much, if any, has it been affecting the company's profitability? The second question is, despite the fact that the share out of revenue by the mobile products has gone up, at the same time, the mobile business appears to have more downside risks than upside due to stronger competition, despite the concentration in the strategic customers. My question is, what is the company's business strategy or the response strategy against this?
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This is Baek Seung-ryong again, in charge of the small display planning and management. In terms of the pressure in the downstream industry as well as the volatility, this is something that is occurring generally across the market, and yes, it is also affecting the company as well. Our goal is for the medium to longer term to continue to increase volume, but also at the same time, given these various constraints, it is also likely that our profitability improvement is going to be limited compared to the increase in the volume.
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Now, based on the technology that we have continued to build up in the smartphone panel business, we will continue to strengthen our position in the market as well as the technological leadership. Based on our cost innovation and also upgrade in the product and operation, we will continue to maintain stable performance while at the same time driving growth in both the revenue and volume so that we can continue to achieve sustainable performance.
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Now, in order to respond to the changes in the market and the market demand, we will continue to maximize the use of existing production infrastructure, and also carefully consider preemptive investment in new technologies. By doing so, we will focus on timely development of new technologies to help competitiveness of new models launched by our customers and heighten the entry barrier to the smartphone panel business.
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Thank you. We will take the last question.
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The last question will be presented by Won-suk Chung from iM Securities. Please go ahead with your question.
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Now, my question is on the Auto business. The Auto business for the company continues to maintain at around 10% share out of the total revenue, but we also see that for the OEMs, the demand is really slow to recover, and competition in the display business continues to get tougher. We understand that the Auto business is relatively stable compared to others because it is based on the orders. The question is, what is the company's current status in terms of the Auto business and the profitability? There was also an update once about the order backlog. Can the company provide the update again in terms of the order backlog today, and what is the expectations of the revenue growth in the future?
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This is Vice President Son Ki-hwan, head of auto marketing and product planning, responding to the question. It is true that the market environment around auto continues to be challenging, with demand and competition both remaining challenging. The global auto market has also been showing gradual recovery since COVID, but auto sales growth is expected to be negative this year due to the Middle East war and inflation. Combined with other factors like tariff uncertainties in the trading environment, semiconductor supply issues, and slower consumer sentiment, real recovery in the auto market is likely to be postponed until next year.
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Despite such constraints, the company is maintaining its stable business operations with focus on our customers. The LTPS-LCD business has kept up its consistent performance based on solid sales by major strategic partners in North America, Korea, Japan, and others. OLED has struggled a little due to the slower sales of European OEM's EV, and delay in mass production of some new models. We do expect stability to settle as the existing projects move into mass production.
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For the medium to longer term, we see high growth potential in the auto display market thanks to wider adoption of vehicle display and larger panel size. It is true that strong growth potential is inviting more competition, but the company will achieve competitive advantage in the market and solidify our business base with our differentiated vehicle Tandem OLED, LTPS-LCD technology, and improvement in cost competitiveness.
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About the order backlog that you asked about, please understand that we are not at liberty to disclose the exact size, given the competing market environment and confidentiality with our customers.
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This concludes LG Display's Q3 2026 earnings conference call. We thank everyone for joining us today. Should you have any additional questions, please contact the IR team. Thank you.