LG Display Co., Ltd.

First of all, thank you all for joining this conference call. And now we'll begin the conference of the fiscal year 2021 fourth quarter earnings results by LG Display. This conference will start with a presentation followed by a divisional Q&A session. If you have a question, please press star 1, that is star and 1 on your phone during the Q&A. Now we shall commence the presentation on the fiscal year 2021 fourth quarter earnings results by LG Display.

Good morning.

This is Brian Ho in charge of LG Displays IR.

On behalf of the company, let me thank all the participants at this conference call. Today's conference call was attended by Chief Executive Officer Kim Seong-hyeon of CFO, Chief Executive Officer Kim Hee-won of Management Strategy, Chief Executive Officer Lim Seung-min of Management Management, Chief Executive Officer Lee Ki-young of Business Intelligence, Chief Executive Officer Lee Tae-jong of Large Marketing, Chief Executive Officer Kwon Jae-young of Small Marketing, and Chief Executive Officer Song Ki-hwan of Auto Marketing.

Today, I'm joined by the CFO, Sung Hyun Kim, Hee Yeon Kim, Senior Vice President of Corporate Strategy Group, Seung Min Im, Vice President of Corporate Planning, Ki Young Lee, in charge of Business Intelligence, Daniel Lee, in charge of Large Display Marketing, Jae Young Kwon, Vice President of Medium-Small Display Marketing, and Kyu Han Son, Vice President of Auto Marketing.

The performance presentation will be held in the same way as the Q&A session. Please refer to the detailed information related to the performance in the IR activity section of the investment information in the performance announcement or on the company's website.

The conference call will be conducted in both Korean and English. Please refer to the provisional earnings release today or the IR events section in the company's website for more details on the financial results of Q4 2021.

First, we will make a presentation on OLED X, a large OLED new technology. Before presenting the company's earnings, there will be a presentation on OLEDX, a new technology for large OLED.

It can be viewed via mobile devices or video webcast through an IT device, as well as on the IR website. The OLEDX presentation will last for about five minutes, followed by a briefing on the financial results of Q4 2021 and the company's outlook for Q1 2022 and Q&A.

The presentation will be conducted by Min-kyu Jin of Life Display Promotion. The large OLED of the company has been continuously evolving and developing since the launch of the product, and the efforts so far have been focused on OLED X.

The technology presentation will be led by Min Kyu-jin in charge of live display promotion. The company's large OLED has been evolving and developing ever since its launch, culminating in the OLED X technology.

This presentation is in English with Korean subtitles at the bottom of the screen.

Hi, I want to appreciate all of you for joining us today. I'm Mingyu Jin. I'm head of Life Display Promotion Division. I'm proud to introduce to you Unmos in OLED Evolution, OLED EX. Evolutionary experience, DEX in OLED EX, embodies our goal of providing customers with an evolved experience through constantly evolving technology. I will introduce to EX technology the core of OLED EX, which enables an evolved experience. EX technology improves product efficiency and brightness by increasing the stability of organic light-emitting devices, which are the most important elements in creating great picture quality of OLED. And the two keys that enable this technology are Deuterium and personalized algorithms. Deuterium is an element also known as heavy hydrogen. And as the name implies, Deuterium has a similar structure to hydrogen, but it has an extra neutron. It is not artificially synthesized. It is a real natural element. However, there is only one atom of deuterium for every 6,000 atoms of hydrogen. We developed a technology to extract deuterium from water to replace hydrogen in existing OLED materials. Our OLED materials maintain their original shape but become more stable through a deuterium substitution process, meaning that they are stronger against electrical stimulation and heat, which means they remain more reliable for longer even at high brightness. In the end, we developed highly stable devices that emit brighter light. Using Deuterium, OLED EX can realize a higher level of natural brightness and detail similar to what we see in real life. The second key to EX technology is personalized algorithms. We use personalized algorithms to control OLED's brightness and enhance performance. by predicting usage for each device according to viewing patterns of each user. I often display places I want to travel to after the pandemic on my OLED TV. This is one of them. It is an aerial view of Grand Prismatic Spring, a huge hot spring in Yellowstone National Park in the US. It looks almost like the sun blazing, doesn't it? Some days, I leave this scene up for a long time, and the blue subpixels on my OLED TV are of course used a lot for the blue part. The green parts use mostly green subpixels, and as you can guess, the red parts use mostly red subpixels. This is where our personalized algorithm technology comes into play, intelligently predicting usage and optimizing each W, R, G, and B element to maintain stable use. These personalized algorithms combined with Deuterium we just talked about gives our old panels their strengths. With EX technology, our OLEDs have evolved to become stronger than ever with 30% increased brightness and natural colors reproduced with greater detail. OLED EX recreates details accurately the way content creators intended. Design is also no exception when it comes to the evolution of OLED EX. OLED EX introduces a new bezel that's about 30% thinner than before, making this the most aesthetically pleasing design of any existing OLED. We took innovative evolution a step further to satisfy the most demanding consumers without making any compromises to OLED's image quality or slim design. We can sum up OLED EX's philosophy of evolution with the words, great detail, meaning detailed innovation to bring our customers perfect picture quality. The reason why we bet on and focus the 10 years of technical expertise on developing the detail is simple, because every detailed innovation results in the details in the contents our customers experience. This is not only important for Hallyu filmmakers and other professionals. It's also very important for everyone who wants to capture, get immersed in, and feel every last detail. OLED EX panels with EX technology will be used in all of our OLED TV panels from the second quarter of 2022. And we will continue to showcase new innovative products with pursuing natural reality, the philosophy that guides us. With OLED EX, we will bring our customers evolved experience with OLED and show evolved leadership in the global OLED market. Thank you.

Thank you for your attention.

Before we begin the presentation, please take

Please note that today's results are based on consolidated IFRS standards prepared for your benefit and have not yet been audited by an outside auditor. I would like to inform you of the account details of the KIFRS No. 1016. According to the account details of the KIFRS No. 1016, the company has modified the accounting process for the products that have been sold during the time of factory operation.

There has been a revision to the KIFRS No. 1016 on property, plant, and equipment.

In applying the revision, the company modified how we account for prototypes that are sold during a plant test operation.

It used to be that the net selling price of the goods produced during test operation would be deducted as PPE as the acquisition cost, but with the amendment, the cost has to be recognized as profit or loss. Early application of the amendment has caused some changes from our earnings in 2020.

With that said, we will now start with the presentation on Q4 2021 earnings result.

Let me start off with our business performance in Q4.

The quarter-term sales recorded 8,810 billion won in 8 seconds due to a large and medium-sized OLED increase in the structure of the business. This is the highest ever in quarter-term sales, 22% compared to the previous quarter and 18% compared to the previous year.

Revenue in Q4 was 8.881 trillion won. It was driven by the higher share of large and medium and small OLED and increase in IT panel shipment following the business structure upgrade. It was the highest ever for a quarter, up 22% QOQ and up 18% YOY.

The sales profit was recorded at 4,760 billion won, which decreased by 10% compared to the previous quarter due to the annual cost of the LCD TV panel price drop and the annual cost of the TV panel price drop. The actual business performance of the company, except for the cost of the TV panel, is in line with the market expectations.

Operating profit was 476 billion won. It was down 10% QOQ due to continued decline in LCD TV panel price and year-end one-off costs.

In terms of actual performance, excluding the one-off factors, it was in line with market expectation.

Operating profit margin in Q4 was 5%, with EBITDA margin at 19%. Net profit was 180 billion won. Let me now go over our business performance for the year.

In 2021, sales recorded 29.878 trillion won and sales profit was 2.23 billion won, which recorded the highest sales record in history with the entry of the OLED business at the level of revenue, and the profit was greatly improved.

Revenue in 2021 was 29.878 trillion won and operating profit was 2.231 trillion won. Revenue was the highest ever, while profitability was also considerably improved, thanks to the turnaround in OLED and upgrade in our business structure.

전년대비 매출은 23% 상승한 수치이며 영업이익은 흑자 전환하여 영업이익률 7%를 기록하였습니다.

We turned around to profit with operating profit margin of 7%. 다음은 출하 및 면적당 판가 추이입니다.

The 4-minute discharge area continued to be dry for IT-type panel discharge, and the large OLED panel discharge increase due to high-end TV demand increased by 12% compared to the previous quarter, recording 9.36 million square meters.

Area shipment in Q4 was 9.36 million square meters, increasing 12% from the previous quarter.

IT panel shipment remained solid, and large OLED panel shipment grew on the back of strong demand for high-end TV. Area panel price was $806, up 8% QoQ, thanks to shipment growth in large and medium-small OLED.

The company's production capacity in Q4 decreased 3% QOQ owing to line adjustment to prepare for new models and additional allocation to R&D. Next is Q4 revenue breakdown by product segment.

The IT panel, whose competitiveness is prominent, recorded 42% of the sales volume and is stable. The TV has increased the number of large OLED panels, but recorded 27%, which fell by 5% compared to the previous year due to the decline in LCD TV panel price. Mobile and other sectors accounted for 31% of the 8% point increase compared to the previous quarter due to the increase in P-OLED smartphones and wearables.

IT panel, our standout among competition, maintained the biggest portion at 42%. TV panels came in next with 27%, down 5 percentage points QOQ despite higher shipment of large OLED due to declining LCD TV panel price. Mobile and others accounted for 31%, up 8 percentage points QOQ, thanks to growth and shipment of P-OLED smartphones and wearables.

Next is the company's financial position and ratios.

The company's cash and cash equivalent at the end of Q4 was 4.3 trillion won.

Inventory was 3.35 trillion won, decreasing by 230 billion won QOQ. The inventory is kept at a higher level than usual as a safety stock to prepare against supply chain uncertainties such as commodities and logistics issues. By the end of 2020, the 20% point will be reduced, and the financial stability improvement performance will also be significant.

Liabilities to equity ratio was 158%, and current ratio was 94%, both almost flat QOQ. Net debt to equity ratio came in at 57%, improved by 6 percentage points QOQ. It was down 20 percentage points YOY, showing meaningful improvement in financial soundness.

Next is the flow of cash. The basic cash increased from 4 trillion 2,090 billion won to 750 billion won, and the final cash recorded 4 trillion 2,850 billion won.

Next is cash flow. The company's cash and cash equivalent at the start of Q4 was 4.209 trillion won.

It increased by 75 billion won and stood at 4.285 trillion won at the end of Q4.

Next is presentation by the company's new CFO, Sung Hyun Kim, on business performance and strategy. Good afternoon and good evening to shareholders, investors, and analysts from home and abroad. This is LG Display's CFO, Sung Hyun Kim.

I went from being in charge of finance to CFO last year, and I greet you for the first time today through this conference call. As the pandemic situation has worsened and competition has worsened, we are also burdened by the new CFO to create new results in strategic projects under the changing business environment. However, in the past few years, our strategic efforts to transform business structure and prepare for the future have gradually come to fruition, and we have high expectations in the process of creating new opportunities.

As the new CFO, I feel the responsibility of having to deliver on the company's strategic tasks under an increasingly volatile business environment with the persistent pandemic and intensifying competition. But I also harbor expectations of new opportunities as we see our strategic push in the past few years to upgrade the business structure and better prepare for the future bear fruit. So with a sense of heavy responsibility, being the CFO at such a critical juncture, I will play an active role in improving corporate performance while balancing opportunities and risks. With that, now let me move on to the guidance for Q1 2022 as well as the company's business strategy. First is Q1 guidance.

Q1 guidance. In Q1, area shipment will decline by mid to high single-digit QOQ.

But the pace of seasonal decline will not be as much as in other years. Although shipment of panels of all sizes is expected to fall due to seasonality, IT panel continues to enjoy B2B demand coming from the increasing trend of work from home, online education, and general changes in the office environment.

But area price is expected to fall by mid to high teen digit due to seasonal decline in shipment of mobile panel.

Next is operational strategy for each business.

Looking back on the past year, we were able to show meaningful results in our core strategic tasks even as COVID-related volatility and uncertainty continued. More importantly, OLED is now at a stage where it can produce substantive results. As a result, the high-end TV market has grown by 30% compared to last year, and Oled TV's share price has risen by 30% compared to last year's 4Q.

Although the TV set market saw negative growth of over 10% last year, sales of OLED TV set grew over 60%, driving the expansion in the overall high-end TV market. The high-end TV market grew at a 30% level YOY, with OLED TV's share in this market surpassing 30% as of Q4 last year.

In addition to the previous year, the number of panels has also achieved growth of more than 70% compared to the previous year. On a daily basis, business results have been shown in earnest, and we have achieved results that have reached the BEP level over the years. In addition to the high growth rate last year, the number of panels this year also aims to grow by more than 20% over the year, and we will continue to expand our profitability based on strengthened business capacity.

Panel shipment recorded a remarkable growth of more than 70% YOY, and the business turned around to profit in the second half of last year, reaching the BEP level for the year. Continuing from last year, shipment growth for this year is planned at 20% for the year. We also plan to keep improving profitability based on the stronger business performance.

In the case of medium-sized OLEDs, they have secured stable operation capabilities in terms of development and mass production quality last year, based on the strong relationship with the strategic trading line. In the mobile sector this year, we plan to further improve the profitability of the previous year through the expansion of the new model in the second half of the year. In addition, we plan to expand the mobile area beyond the medium OLED premium market based on differentiated competitiveness and to expand the mobility industry such as cars.

In the case of small and medium OLEDs, we became capable of ensuring consistency in development, mass production, and quality. It is now in a stable growth path based on stronger relations with strategic partners. In mobile business, we aim to further improve profitability by expanding new models in the second half. We will leverage our unique competitiveness to broaden outside the mobile, preempt medium-sized OLED premium market, and expand to the mobility industry, including automobiles. The LCD sector also achieved outstanding results by proactively responding to market changes. In LCD, we are maintaining the select and focus approach centered on high-end IT in line with our strategic positioning.

This year is expected to see demand adjustment after COVID-19. The company is constantly trying to reduce variability and secure the stability of business operations, and for this purpose, the company is gradually increasing the proportion of supply-type businesses that are greatly affected by the market situation, and is continuously expanding the proportion of businesses that can perform stably while strategically cooperating with customers.

The company continues to secure stability in business operation by minimizing volatility. We are gradually reducing the portion of supply-demand businesses that are highly susceptible to market conditions, while increasing the businesses that can produce consistent results in strategic collaboration with customers.

Going further, anchored on OLED, we will continue to expand our business to deliver new experience and values to customers going beyond existing product areas. Last is our investment and financial management activities. Last year, CapEx raised 3.2 trillion won, and in 2022, the medium-sized OLED investment campaign, which was decided last year, will begin this year, and it is expected to increase compared to last year. At the same time, the party will continue to improve its financial stability while following EBITDA's CapEx policy.

CAPEX last year was 3.2 trillion won. It is expected to increase this year as we go ahead with the investment in small and medium OLED that was decided last year. The company will keep to the principle of keeping CAPEX within EBITDA while trying to improve our financial soundness.

On Friday, the company announced a medium-term dividend policy that is predictable and can be implemented at a high value-added level. According to the 2021-2023 business year standard, it wants to maintain a dividend tendency of 20% in the short-term interest rate, and according to this, in the 21st year of the business year, the company decided to make an average dividend of 650 won per week on Friday.

The company announced today a predictable and sustainable mid-term dividend policy with a view to improve shareholder value. We will maintain a dividend payout ratio of 20% of the consolidated net profit from the business years of 2021 to 2023. Accordingly, the BOD today decided on 651 per share in cash dividend for the 2021 business year.

The company will keep looking for ways to improve shareholder value from a long-term perspective. Pandemic lingers.

We will bolster our responsiveness to the external environment to minimize risk and ensure stability in business operations. We will spare no effort to continuously heighten market confidence and create higher values. Thank you.

That brings us to the end of earnings presentation for Q4 2021.

We will now take questions.

Operating session. 질문을 취소하시려면 별표와 2번을 눌러주시면 됩니다. 원활한 회의 진행을 위하여 질문은 한 분당 두 가지 이내로 부탁드립니다. Now, Q&A session will begin. 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'd appreciate only two questions for each participant. The first question will be provided by Hyunsoo Kim from Hana Financial Investments.

Please go ahead with your question. Regarding the replacement oil, I am curious about the performance in 2021 and the direction in 2022. Is there a change in the 21-year and 22-year expected drop-out numbers mentioned last time? And how much profit was there in 2021 and how much profit is expected in 2022? And now it's LCD. The LCD TV panel price is in the 7-month drop, and as you know, the 30-inch and 40-inch are showing signs of a gradual drop, so please tell us how you are looking at the flow of the panel price this year. And the IT side has also changed from last month, so please tell us how you are looking at the price of the IT side. Thank you.

Now, I have two questions, one on large OLED and another on LCD. Now, first about the large OLED. So what was the performance in 2021 and the outlook for 2022? So are there any differences between the guidance last time about the 2021 performance and the expected shipment in 2022? and also what was the profitability for these business division so for 2021 and also the outlook for 2022 and the second question is on lcd so the lcd panel price has been falling for the seventh seventh month now but then we are also now seeing some signs of the price decline stopping for 30-inch and 40-inch LCD panels. Then what is the panel price outlook for LCD this year? So for IT, we see that the IT LCD panel price also started to decline last month. So what is the price outlook for IT panel this year?

Regarding the first question about the large OLED, this is Daniel Lee in charge of large display marketing responding to that. As our CFO highlighted earlier, last year's real sales of the entire TV set market rose again by 10% at the beginning of the year. However, Oled has strengthened its position in the market while supporting the high-end TV market and achieved more than 30% market share in the entire high-end market in the fourth quarter.

Now, first of all, as the CFO had highlighted earlier, the overall TV set market showed negative growth of over 10% last year, but among them, the OLED TV, in other words, the high-end TV, to grow and OLED TV solidified its position in the high-end TV market. So in the fourth quarter of last year, the OLED TV took up over 30% in the high-end TV market.

To give you a little more highlights, we achieved a significant market share of more than 30% in North Korea and 40% in Europe.

To give you more highlights, what we see as some meaningful performances, so in the developed markets like the North American market, for the year, it took up over 30% market share, and in Europe, it was over 40% for the year.

In addition to the growth of the actual sales, the number of panels has increased by more than 70% compared to the previous year. Based on this, we can say that the business performance has reached the level of BEP in the second half of last year.

Now, not only the sales of the TV set, but accordingly, the company's panel shipment also grew by over 70% YOY. So, in the second half, it turned around to profit, and for the year, it reached BP.

In terms of the target output, we had a slight drop in the quantity, but overall, we achieved a large area.

Now, in terms of the specific shipment, we did fall a little bit short of the target in terms of the shipment. But then in terms of the area, we did come in line with the target as we had focused more on the large OLED.

This year, as the CFO had reported earlier, we... Our guidance is over 20% of increase in panel shipment.

And the more recent numbers show, although they are for the weekly sales, but so in the month of January, we see that the actual sales remain similar to the fourth quarter level. And based on our stronger business structure, we will continue to improve our profitability.

That's all.

The next question is from Jung Won-suk of High Investment Securities. The following question will be presented by Won-suk Jung from High Investment Securities. Please go ahead with your question.

I'm sorry. I'm sorry. I'm sorry. I'm sorry.

We apologize for the inconvenience. We have not finished the response to the first question by Mr. Kim Yeon-soo, so allow us to complete the response and then we will take the next question.

Yes, I will tell you about the IT price flow in charge of BI, Lee Ki-young. The IT evaluation started about a minute after the TV debut. That's why we expect the stable price to be very good for TV this year.

Now, this is Kiyoung Lee in charge of business intelligence responding to your question about the outlook for IT panel price. Now, for the IT panel compared to the TV, The decline in price was lagging behind by about a quarter. So, we believe that in terms of the stabilization of the prices, it will also come later than the TV price.

However, since the price drop will mainly be based on low-priced products such as TN and VA, the high-end price of self-produced products is expected to be relatively stable.

But then we believe that most of the IT panel price decline will be centered on the low-end products like TN or VA. And for the high-end products where the company is strong, we believe that the price will remain stable. That is all.

My name is Kwon Jae-young, and I'm in charge of marketing for small and medium-sized enterprises. I'd like to add something to what you said about the IT market.

Now, this is Jae Young Kwon from the Medium Small Display Marketing. And just now, regarding the IT market outlook, there was explanation by Ki Young Lee from Business Intelligence, but I would like to just add some additional explanation.

First of all, let me tell you about the demand for IT. As you know, due to the pandemic, the demand for IT has increased dramatically due to the online classes. Due to COVID-19, the regulations are being eased, and as external activities increase, the demand for B2B is gradually decreasing. However, the demand for B2C is gradually decreasing. However, in the case of B2B, as the back-to-office economy gradually recovers, will gradually increase in 2022.

Regarding the demand outlook for IT, since the onset of the pandemic, there was the trend of working from home as well as online education, which drove the demand for IT products. But now as COVID-19 continues to be prolonged, we are also seeing the easing of restrictions in different parts of the world and now are increasing outdoor activities by the citizens. So this means that the B2C demand is likely to go down. But then for the B2B, because of the back-to-office trend as well as the recovery in the economy throughout the world, We believe that the B2B demand in 2022 will remain strong.

The demand for B2B will remain strong. As a result, since the end of last year, the price of IT has also dropped.

Now for the demand itself, then between 2022 and 2021, the outlook is that they are going to be pretty much similar. So a flat demand between 2021 and 2022. But then when it comes to supply, because of the soft TV market last year, starting in the second half of last year, much of the supply on the TV side has been shifted to IT. which had prompted the decline in IT prices starting in the last part of last year.

uh uh uh will be able to maintain.

So for the short term, we believe that the IT price decline, which started in the latter part of last year, will continue for the time being. But then in terms of the pace of the decline, now that is mostly concentrated in the mainstream products, whereas the company is strong in the high-end products. So we do believe that our business will remain stable compared to the overall market.

We will take the next question.

We will take the next question. The following question will be presented by Won Seok Jung from High Investment Securities. Please go ahead with your question.

Thank you for the opportunity to ask a question. I'm Won Seok Jung from High Investment Securities. I would like to ask two questions. The first question was recently reported in the media. There have been many debates about Samsung Electronics adopting LG Display's White OLED panel. How far is it actually going? And I think it's almost the end of the year. If you can comment on the update, please. The second is that Samsung Display has officially started to build the QD OLED. What do you think is the advantage of QD-OLED vs. White-OLED?

Now, I also have two questions. First is what has actually been reported through media coverage extensively recently, and that is about the cooperation between Samsung Electronics and LG Display. Samsung Electronics deciding to adopt LG Display's white OLED. Now, so if you could give us an update on this front, and if new, then this probably means that we... The first question is for CFO. The question is,

Actually, this is not just a matter of our company, but it is related to a specific client. So, we will not be talking about the specific mention or the planning or the progress.

CFO responding to the first part of the question. Given that this involves not only the company but a specific customer, please understand that we are not in the position to give a comment on it or share our plan or update.

In the high-end TV market, OLED has continuously improved its performance Basically, this year, the company's policy is to plan its growth in the existing customer structure.

And I already explained earlier that the high-end TV, so in the high-end TV, the OLED achieved outstanding performance. And the company's plan is to continue with this growth trend based on the existing customer base.

Yes.

But if new customers are to be gained, then in terms of the OLED, we do believe that it will have a positive impact on increasing sales of OLED in the premium market.

And this is Daniel Lee in charge of large display marketing responding to the second part of the question. Q. What are the strengths of QD OLEDs compared to the competition's QD OLEDs? As we have mentioned several times, the competition's OLED products are welcome in terms of premium, OLED trend, and location expansion.

So the second question was about the advantages of the company's OLED over QD OLED. And as had been explained earlier, now the launch of the OLED products by other players is a welcome development for our part because it would help mainstream the premium OLED products and will also have a positive impact on driving sales.

It is true that there had been some media exposure at the CES, but then the actual product has not been launched in the market yet.

So any comparison would have to wait until it's been launched.

However, what I would like to emphasize is that in terms of product competitiveness, we believe that the overall product competitiveness ratio, not just one or two, is reasonable. After the launch, the market will probably evaluate this part well.

But I would just like to add that when it comes to the product competitiveness, it does not depend on one or two specific specifications. So I believe that what is important is the overall quality as well as the overall competitiveness. And I do believe that the market will be able to make that decision after the launch.

And for us, who have been in the product launch and business for more than 10 years, we believe that the overall competitiveness is much higher in terms of product and price competitiveness, the economy of size, customer base, and preparation of products. We will continue to work to expand this gap.

And now, given our history of more than 10 years since the launch, as well as business operation, and also based on our product competitiveness and cost competitiveness, as well as the economy of scale and the customer base, as well as the readiness of our differentiated product lineup, we do believe that we are enjoying an overall competitiveness, and we intend to maintain this competitive edge.

Yes, that's all.

We will take the next question.

The following question will be presented by Jeonghun Jeong from Samsung Securities. Please go ahead with your question.

Thank you for the opportunity to ask a question. I was going to ask two questions, but I don't understand one of the questions in the presentation, so I'll ask one more question. First of all, I said that I did in-line with the market compared to the market market, except for the one-off cost in the fourth round. I think the explanation for the one-off is a little missing, but I may not have heard of it. Please check that once. The second is that the auto display is constantly mentioned every year. I would like you to highlight this part again at the current point in the future. If there is a future growth driver, is it from an application point of view? Or is it a problem with the disk format? Or are there any parts that customers can expect? I would like to ask you to explain that. Lastly, the panel companies have been doing well since the pandemic. The demand was good, the sales were good, and we did well. In the case of the Taiwanese panel company, in the third quarter, the OP margin was almost 20%, and we did well. I think it would be helpful if you could explain these aspects in addition to ensuring competitiveness or expanding profitability. Thank you.

Now, I also had two questions, but then I also have one request for clarification about the presentation earlier. So it was explained that for the fourth quarter financial performance, excluding one-off factors or the one-off costs, then the performance was actually not believe I heard about the one of factors so maybe i missed but if you could clarify what the one of factors were and then the next question is we have been hearing we hear more about the outlook so if you could give us some more highlights about the auto display and if you believe that there are growth drivers for auto display then do you believe that they will come from applications or the display form or from the customers and the last question is now since the pandemic we see many of the panel makers enjoying higher sales as well as profitability but then we see that uh like taiwanese panel maker is enjoying like over 20 operating profit margin in the third quarter of last year and of course the company has also done quite well but then I'm just wondering about the difference and also when it comes to the company strengthening its competitiveness, then what do you believe its implications will be with regards to the margin as well?

Yes, I'd like to talk about the cost-effectiveness of CFOs. When it comes to the cost-effectiveness of CFOs, Just as there is such a system, there is also a process of sharing business performance with our employees who have actually created our business performance.

This is the CFO regarding your question about the one-off costs. Now, when it comes to business performance, we have a way of sharing the good performance with investors in the form of dividend. Likewise, we also have a way of sharing our performance with those who made it possible, in other words, the executives and the employees of the company.

The reason why I can't give you a specific number is because there hasn't been any concrete communication about how to share and share the business performance with the employees. So today, without that process, There is a difficulty in talking about it. After the process is completed, we will create a situation where we can talk about it individually.

And the reason why I cannot give you the specific numbers today is because we have not gone through the communication with the members of the company about how we are going to share the business performance. So please understand that it's a bit too early for us to give you further details. But once we do go through the process, then we will create opportunities where we will be able to communicate with you on a one-to-one basis.

Hello, I am Seung Gi-hwan from Auto Marketing.

I will answer the second question related to auto. First, I will talk about the auto business situation.

As you know, LG Display has leadership in terms of sales and technology in the automotive market.

First, about the status of our auto business. As is well known, LG Displays enjoys leadership in the auto business in terms of both sales and technology.

In particular, as the display in the car gradually becomes larger, higher resolution, and design discriminatory elements are emphasized, the size of the water tank continues to grow. As a result, our LG display has the strength of the LTPS LCD OLED water tank capacity of more than 90% at the end of 2021.

And especially with the auto display, the size becoming bigger and the resolution requirement also becoming higher and also more sophisticated requirement for design, the orders that we receive continue to grow. And as a result of this, for LG display, the order backlog for the LTPS LCD and OLED remains at 90% as of the end of 2021.

Second, I would like to talk about the auto business strategy. LG Display is planning to expand its market and customer segmentation-based technology platform.

And then about our auto business strategy.

Now LG Display intends to have customized platform for the different market segments as well as the customers.

Now for the auto conditions, now in terms of the extreme conditions that are required for the auto display, now the LG display will center its marketing on the tandem OLED. So for the customers that value design, then we will provide our plastic OLED.

We are planning to launch the ATO, Advanced Thin OLED, which has improved its price competitiveness compared to the P-OLED. We are actively promoting market and customer expansion through these two OLED platform technologies.

And for the customers who value the higher picture quality, then we can also provide the ATO, which is the Advanced Thin OLED. So based on these two technologies, we will be able to continue to broaden our market as well as the customer base utilizing our OLED platform.

Lastly, based on cost competitiveness rather than discrimination,

And last, for those who wish to differentiate by cost, then we can also market our in-cell touch-based LTPS LCD.

That's all.

That is all. And this is Ki-young Lee from BI responding to a question about the difference in profitability with other players. Now, the profitability difference in the LCD business comes from the differences in the customer structure as well as the product lineup.

In the past, when we look at the history of the display, when the customer base is high and when the product base is high, when the market is good, there is an excess profit, and in the opposite situation, there is a characteristic that the loss repeats.

Now, when we look at the history of display business, then we see that when there is a higher share of commodity or general LCD products, then when the market is doing well, then the profitability also tends to improve considerably. But then vice versa, when the market is not doing well, then there could be big losses.

It is true that the loss of Taiwanese LCD companies, which have a high share of other customers and have a high share of commodity products, has increased.

So we see that for the players like the Taiwanese player that have a larger share of other customers and also larger share of commodity products, they have we see that they have benefited more than other players during the pandemic.

As I explained earlier, there is a decline in commodity prices. As assets are in the process of differentiating in the long term, we expect a more stable performance in the future.

As was explained earlier, we see that the price is falling centered on commodity products. And for the company, we are focusing more on differentiating for the long term. And we believe that we will be ready to have a more stable business down the road.

We will take one last question.

The next question is from Simon Woo of Bank of America. The following question will be presented by Simon Woo from Bank of America Securities. Please go ahead with your question.

Thank you for the question. My name is Woo Dong-jae. I would like to thank you for making a very good statement in the last four minutes of the first question. Kepa is currently in full operation. Since the new KEPA is expected to be released in a year, I wonder if we can achieve top-line growth in the OLED section in 2022, and I wonder if we can achieve a high growth rate with the maximum operating rate and productivity improvement.

Now, first of all, thank you for the good performance in the fourth quarter. And my question is pertaining to the growth potential down the road, because we see that the OLEC capacity is almost to the full, and the new ramp-up can come only like in a year's time. Then in 2022, does the company believe that there is still room for more top-line growth to come for OLED? Perhaps maximizing utilization rate and also enhancing productivity could help pull up the growth rate, but then it would also have limitations. So what is the company's outlook for the growth of OLED?

Yes, this is Kim Hee-won from the strategy group.

This is Heeyeon Kim of Corporate Strategy Group. So the question is pertaining to the growth potential of large OLED. Now regarding this, we see that recently the market is moving more toward convergence.

The area that we think we have an opportunity under this convergence trend is to advance the TV area based on existing white RGB technology, as well as the IT part of gaming that is being done recently, and we are preparing to enter the mobility market through the transparency that only OLED has. So under this trend of convergence, we believe that there will be more opportunities for the company

So, for example, based on the WRGB technology, we can supply to the TV market, not only that, but IT in the gaming side. And then also utilizing our unique transparent feature for OLED, we can also get ready to move into the mobile market. And in these markets, for these products, the ASP would be higher than the TV. So it is from both the revenue growth and also higher profitability that we are seeking to achieve top-line growth.

In short, there is a growth of the CAPEX axis, which started in the middle of the year when the CAPEX investment was announced. And without CAPEX, we will increase the ASP of the existing application by increasing the ASP higher than the previous application through gaming and transparency, which I mentioned earlier.

So in short, more growth will come after capex spend. So for example, there's going to be the capex on the begin from 2024. So there is going to be a higher sales from here. And also even without capex spend from the gaming and the transparent OLED side, the ASP is going to be higher than other applications.

so um let me make one correction so about the transparent display so it's not getting ready to enter the mobile but it's the mobility market foreign I think you are more likely to touch on investors. And now, the balance is also 2 billion, 3 billion a year, so if you invest as much as EBITDA, pay taxes, and use the working capital, and if you give the balance, I think the performance will be significantly different. I would appreciate it if you could draw a big picture of this comprehensive operation plan. That's all.

Thank you very much for the good explanation. And then this question is to the CFO. So you did emphasize the company's intent to keep the CapEx within EBITDA. But then given the fact that the EBITDA has grown considerably from the past, from the investor's perspective, perhaps keeping it in line with depreciation amortization would be more reasonable? Yes. because now the dividend payout is likely to be around 200 billion, 300 billion won. So there is the EBITDA, and then there is also the taxes to be paid, and then setting aside the working capital. After all this, then the cash is likely to be quite tight. So what is the company's view on this comment?

This is the CFO and I take that as a suggestion or a recommendation to the company and we will take that comment into due consideration. As you all know very well, part of the nature of this business is that it requires large-scale investment.

And I'm sure that you also understand that this is indispensable to make sure that we achieve sustainability and also continued profitability, which are also the aspiration of both the company and the shareholders.

I'm aware of this, but then for the company,

To make sure that we get the right returns on our investment, we have and I also have five rules and one additional rule.

First of all, the investment that the company pursues is based on the accuracy of the medium-term strategy that our company is looking at.

First, we look at whether there is alignment between the planned investment and the company's mid- to long-term strategy.

And the demand in the market, and the supply in the market, and the KEPA that we can produce, And we look at the ability to sell. We look at the compatibility.

And we also look at the market demand and also more importantly, recently, the market supply, as well as our selling capability and also our production capacity. In other words, we also look at the fit between our current condition and the planned investment.

And will it be the right timing for us to mass-produce the product and put it on the market through this investment? And in terms of investment, is the company able to invest now? We are reviewing this with the subject of competitiveness.

And we also look at the timeliness of the investment. In other words, between the time of making the investment until the mass production, then will the production be in time for the market? And also whether it is the right time for the company to make this kind of investment, whether the company has the fundamentals to withstand this?

Yes. And, of course, also the economics, which are also the more immediate factor.

And we also look at the technological feasibility. In other words, whether the company has the right technology and the technological sophistication befitting this investment.

Yes, so lastly, this is about the business performance. And in terms of finance, we look at one more thing. Do we have money to invest? If we don't have money to invest, how will it be achieved in the market? We look at such situations.

So that is from the business performance side and then the one additional rule for the finance side. And that is whether we have the financial resources to make this investment at this time. And if we lack such financial resources, then how are we going to finance that from the market?

As I said, we are investing in EBITDA. Now for the capex plan of the year, as was explained earlier, we intend to keep it within EBITDA. So I hope this will be a good time to share our achievements with others. I hope it will be short.

And we are moving ahead with the investment with the answers to all of those five plus one rules with the conviction that it is the investment that we need. So I hope for your patience for a bit. And I do hope that we will be able to share in the good performance out of it. And I also hope that the time until then will become shorter.

Thank you.

That brings us to the end of the conference call for the earnings presentation of LG Display Q4 2021.

I thank all the participants, and if you have further questions, then please contact the IR team.