LG Display Co Ltd (LPL) 2022 Q4 法說會逐字稿

[Interpreted]

[解讀]

Good morning, and good evening. First of all, thank you all for joining this conference call. And now we will begin the conference of the Fiscal Year 2022 Fourth Quarter Earnings Results by LG Display. This conference will start with the presentation followed by a divisional Q&A session. (Operator Instructions)

早上好，晚上好。首先，感謝大家參加本次電話會議。現在我們將開始召開 LG Display 2022 財年第四季度財報會議。本次會議將以演示開始，然後是部門問答環節。 （操作員說明）

Now we shall commence the presentation on the fiscal year 2022 fourth quarter earnings results by LG Display.

現在我們將開始介紹 LG Display 2022 財年第四季度的收益結果。

[Interpreted]

[解讀]

Good morning. This is Brian Heo, in charge of LG Display's IR. On behalf of the company, let me thank all the participants at this conference call. Today, I'm joined by the CFO, Sunghyun Kim; the CSO, Hee-Yeon Kim; Seung Min Lim, Senior Vice President of Corporate Planning; [Jeong Li], in charge of Business Intelligence; [Daniel Lee], In Charge of large display marketing; Seong Gon Kim, in charge of Medium Display Marketing, and Ki Hwan Son, Vice President of Auto Marketing.

早上好。我是 Brian Heo，負責 LG Display 的 IR。我代表公司感謝本次電話會議的所有參與者。今天，首席財務官 Sunghyun Kim 加入了我的行列； CSO，Hee-Yeon Kim；企業規劃高級副總裁Seung Min Lim； [Jeong Li]，負責商業智能； [Daniel Lee]，負責大屏營銷；負責媒體顯示營銷的 Seong Gon Kim 和汽車營銷副總裁 Ki Hwan Son。

The conference call will be conducted in both Korean and English. Please refer to the provisional earnings release today or the IR Events section of the company's website for more details on the financial results of Q4 2022.

電話會議將以韓語和英語進行。有關 2022 年第四季度財務業績的更多詳細信息，請參閱今天的臨時收益發布或公司網站的 IR 事件部分。

Before we begin the presentation, please take a moment to read the disclaimer.

在我們開始演示之前，請花點時間閱讀免責聲明。

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.

請注意，今天的結果基於統一的 IFRS 標準，為您的利益而準備，尚未經過外部審計師的審計。

Before we begin the earnings presentation, CFO, Sunghyun Kim, will provide a briefing on the company's main tasks and activities.

在我們開始收益報告之前，首席財務官 Sunghyun Kim 將簡要介紹公司的主要任務和活動。

[Interpreted]

[解讀]

Good morning. This is Sung-Hyun Kim, CFO of LG Display. Looking back on 2022, we see demand slowdown accelerate in major product groups, on the heels of worsening macro environment, resulting in year-long inventory correction in downstream industries, softening demand that started in general B2C products, spread to B2B, then to high-end product groups as well, which had shown relatively solid demand.

早上好。我是 LG Display 的首席財務官 Sung-Hyun Kim。回顧2022年，隨著宏觀環境的惡化，我們看到主要產品群的需求放緩加速，導致下游行業長達一年的庫存調整，需求疲軟從一般B2C產品開始，蔓延到B2B，然後到高位-終端產品組也顯示出相對穩定的需求。

The display market continued to face headwinds, with panel prices still on the trend of decline, although the pace slowed down. Given the protracted challenges in the market, the company is focusing on recovering financial soundness and future proofing. Upgrading our business structure remains our utmost priority, where we will concentrate our internal capabilities.

顯示器市場繼續面臨逆風，面板價格仍處於下降趨勢，但步伐有所放緩。鑑於市場上的長期挑戰，該公司正專注於恢復財務穩健性和未來證明。升級我們的業務結構仍然是我們的首要任務，我們將集中內部力量。

Allow me to first brief you on our activities and achievements in recovering our financial soundness. The company is moving ahead of the original timeline to downsize LCD TV business, which has structurally weakened competitiveness. Production in Gen 7 LCD TV fab located in Korea was terminated at the end of last year, and the remaining Gen 8 LCD TV fab in China is scheduled to downsize to 50% of its capacity starting this year. Under the assessment that LCD TV business is unlikely to recover competitiveness, we will phase it out, while responding to commercial products and the volume agreed with customers.

請允許我首先向您介紹我們在恢復財務穩健方面的活動和成就。該公司正在提前縮減 LCD 電視業務的原定時間表，這在結構上削弱了競爭力。位於韓國的第 7 代液晶電視工廠已於去年年底停產，而中國剩餘的第 8 代液晶電視工廠計劃從今年開始將產能縮減至 50%。在評估液晶電視業務不太可能恢復競爭力的情況下，我們將逐步淘汰它，同時響應商業產品和與客戶約定的數量。

To address the continued soft demand and secure operational flexibility, the company undertook intense production adjustment. The inventory reduction by around KRW1.6 trillion from Q3, affected profitability in Q4, but it placed the company in a better position, to flexibly respond to market environment in the first half of this year. The preemptive inventory adjustment in Q4 is expected to reduce costs in Q1 this year. The company plans to keep reducing costs and improving operational efficiency through LCD TV capacity downsizing in China, intense production adjustments in large OLED fabs in Korea, and close monitoring of real demand changes and market inventory.

為應對持續疲軟的需求和確保運營靈活性，公司進行了密集的生產調整。與第三季度相比，庫存減少約 1.6 萬億韓元，影響了第四季度的盈利能力，但它使公司處於更好的位置，可以靈活應對今年上半年的市場環境。四季度的提前庫存調整有望在今年一季度降低成本。該公司計劃通過中國液晶電視產能縮減、韓國大型OLED工廠的生產調整以及密切關注實際需求變化和市場庫存來持續降低成本和提高運營效率。

Next is on the progress of the company's business realignment efforts and future plans. In supply and demand-based business, we will enable a more rational operational structure and secure consistent profitability and create value by focusing on high value-add products, while responding to market volatility

接下來是公司業務重組工作的進展情況和未來計劃。在供需業務方面，我們將通過聚焦高附加值產品，實現更合理的運營結構，確保持續盈利和創造價值，同時應對市場波動

Not stopping there, the company will add a stronger drive to the transition in order based business structure. We are systematically preparing for projects agreed with customers, like the new smartphone lines to be mass produced in the second half of the year and OLED for IT products to be mass produced in the first half of next year. Such order based business took up 30% of our business last year, expected to be in the low 40% this year and exceed 50% in 2024.

不止於此，公司將以訂單為基礎的業務結構轉型加入更強大的動力。我們正在系統地準備與客戶約定的項目，例如下半年量產的新智能手機系列和明年上半年量產的IT產品OLED。此類基於訂單的業務去年占我們業務的 30%，預計今年將處於 40% 的低位，並在 2024 年超過 50%。

We also continue to broaden market creating businesses. The company keeps exploring new markets with our competitive products like gaming and transparent. We will build a stable revenue structure, by strengthening the future business portfolio.

我們還繼續拓寬市場創造業務。公司通過我們的競爭產品，如游戲和透明，不斷開拓新市場。我們將通過加強未來的業務組合來建立穩定的收入結構。

With market volatility remaining high, sluggish demand for panels is expected to last into the first half of the year. The market situation where panel shipment falls short of actual sales is expected to persist in the first half, but the panel inventory issue is likely to be mostly addressed in the first half, regardless of the real demand for sets, thanks to intense production adjustment across the industry. This will hopefully return the industry-wide inventory to healthy levels in the second half.

由於市場波動性居高不下，預計面板需求低迷將持續到上半年。預計上半年面板出貨量低於實際銷量的市場局面仍將持續，但由於各地生產調整力度大，無論成套需求如何，面板庫存問題有望在上半年得到解決。行業。這有望在下半年將全行業庫存恢復到健康水平。

Having said that, with recovery in real demand remaining uncertain, the company remains focused on large-scale cost cutting. Both volume and revenue are expected to decrease in Q1, given its traditional seasonality on top of industry-wide inventory adjustment.

話雖如此，但由於實際需求的複蘇仍不確定，該公司仍將重點放在大規模削減成本上。鑑於其傳統的季節性以及全行業的庫存調整，預計第一季度的銷量和收入都將下降。

The company expects about a KRW1 trillion cost reduction in Q1 from the large-scale business rationalization underway from Q4, such as active inventory control, LCD TV downsizing and OLED TV production adjustment. In addition, new capacity utilization for smartphones and strong improvement in fundamentals, will improve performance quarter-to-quarter and help achieve a turnaround in the second half of the year.

該公司預計，從第四季度開始進行的大規模業務合理化，例如積極的庫存控制、液晶電視縮小尺寸和 OLED 電視生產調整，將在第一季度減少約 1 萬億韓元的成本。此外，智能手機的新產能利用率和基本面的強勁改善將提高季度業績，並有助於在下半年實現扭虧為盈。

In terms of investment, only the minimum ordinary investment will be made along with the investment in order based projects already agreed with customers. CapEx for the year will be around KRW3 trillion on a cash out basis.

在投資方面，在與客戶約定的訂單項目投資中，只進行最低限度的普通投資。按現金支出計算，今年的資本支出約為 3 萬億韓元。

The last point before we present the Q4 earnings is regarding the increase in Q4 net loss. The company's mid to large-sized panel businesses have been accounted as one cash-generating unit, but following the decision to phase out the marginal LCD TV business, large OLED business was separated as standalone cash generating unit in Q4.

在我們公佈第四季度收益之前的最後一點是關於第四季度淨虧損的增加。公司的中大型面板業務一直被視為一個現金產生單元，但在決定逐步淘汰邊際液晶電視業務後，大尺寸 OLED 業務在第四季度被分離為獨立的現金產生單元。

We saw some turnover to the meter. For the separated cash-generating unit, asset valuation was reviewed and assessed by an outside organization in accordance with the standards and procedure in place. With soft demand for premium TVs last year due to economic slowdown, as well as the downward revision of demand outlook, asset impairment of approximately KRW1.3 trillion was recognized for OLED business to ensure proper accounting.

我們看到了一些營業額。對於獨立的現金產生單位，資產估值由外部組織根據現行標準和程序進行審查和評估。由於去年經濟放緩導致高端電視需求疲軟，以及需求前景下調，OLED 業務確認了約 1.3 萬億韓元的資產減值，以確保正確核算。

The result was reflected as non-operating expense in Q4, which increased the net loss. But as you would all understand, it is a result of accounting adjustment, that has nothing to do with cash flow. The company expects positive impact down the road, as it reduces our business uncertainties.

結果反映為第四季度的營業外支出，增加了淨虧損。但是大家應該都明白，這是會計調整的結果，跟現金流沒有關係。公司預計未來會產生積極影響，因為它減少了我們業務的不確定性。

As the leader in large OLED, the company possesses incomparable competitiveness in premium TV market, where we intend to keep growing our market share. We will keep creating a consistent revenue structure by enabling qualitative growth. As we keep strengthening our product and cost competitiveness and accelerate our push to open up new markets like transparent and gaming.

作為大尺寸OLED的領導者，公司在高端電視市場擁有無可比擬的競爭力，我們打算繼續擴大我們的市場份額。我們將通過實現質的增長來繼續創造一致的收入結構。隨著我們不斷加強我們的產品和成本競爭力，並加快我們開闢透明和遊戲等新市場的步伐。

Thank you very much for your attention.

非常感謝您的關注。

[Interpreted]

[解讀]

Let me now continue with our business performance in Q4. With worsening macro economy in Q4, the demand continued to remain subdued, it was followed by inventory adjustment across downstream industries, the impact of which also spread to high-end products, which had been showing relatively solid trends.

現在讓我繼續介紹我們在第四季度的業務表現。四季度宏觀經濟轉差，需求持續低迷，隨之而來的是下游行業庫存調整，其影響也波及到高端產品，高端產品一直表現出相對穩健的態勢。

Revenue in Q4 went up 8% Q-o-Q, thanks to shipment of new smartphone products, but there was operating loss of KRW876 billion, following shipment decrease of IT panels, decline in panel prices and intense production adjustment to reduce inventory.

由於新智能手機產品的出貨，第四季度收入環比增長 8%，但由於 IT 面板出貨量減少、面板價格下降以及為減少庫存而進行的強烈生產調整，導致運營虧損 8760 億韓元。

Operating profit margin in Q4 was minus 12%, with EBITDA margin at 3%. There was net loss of KRW2.094 trillion with KRW1.33 trillion of impairment being accounted as nonoperating loss.

第四季度的營業利潤率為負 12%，EBITDA 利潤率為 3%。淨虧損為 2.094 萬億韓元，其中 1.33 萬億韓元的減值計入營業外虧損。

For the year, revenue in 2022 was KRW26.152 trillion, down 13% Y-o-Y. There was operating loss of KRW2.085 trillion. Operating profit margin was minus 8%.

全年，2022 年收入為 26.152 萬億韓元，同比下降 13%。營業虧損為 2.085 萬億韓元。營業利潤率為-8%。

Next is area shipment and ASP trend. Area shipment in Q4 was 7.86 million square meters, increasing 2% from the previous quarter. It was lower than ordinary seasonality due to demand decrease in midsized products and structural innovation in large product business. ASP per square meter was $708, going up 5% Q-o-Q. This is owed to the increase in portion of smartphones and wearables.

接下來是區域出貨量和平均售價趨勢。第四季度出貨面積為786萬平方米，環比增長2%。由於中型產品需求下降和大型產品業務結構創新，低於一般季節性。每平方米平均售價為 708 美元，環比上漲 5%。這是由於智能手機和可穿戴設備的份額增加。

Next is revenue breakdown by product segment. OLED accounted for 52% in Q4 following the transition to OLED-focused business structure. For the year, its portion grew sharply from 32% in 2021 to 40% in 2022. OLED's contribution to financial performance is expected to keep growing this year, with its portion out of revenue exceeding 50%. It will be largely driven by growth in smartphone capacity and panel shipments in the second half of the year, as well as the continued phaseout of LCD TV business. TV panels accounted for 25%, unchanged Q-o-Q. Share of IT panel was 34%, falling by 9 percentage points Q-o-Q. There was a decrease in panel shipments and decline in panel prices.

接下來是按產品細分的收入細分。隨著向以 OLED 為重點的業務結構過渡，OLED 在第四季度佔 52%。從全年來看，其占比從 2021 年的 32% 大幅增長到 2022 年的 40%。OLED 對財務業績的貢獻預計今年將繼續增長，其在收入中的佔比將超過 50%。主要受下半年智能手機產能和麵板出貨量的增長，以及液晶電視業務的持續淘汰所推動。電視面板佔比25%，環比持平。 IT面板的份額為34%，環比下降9個百分點。面板出貨量下降，面板價格下滑。

Portion of mobile and other products was 34%, up by 9 percentage points Q-o-Q on the back of higher shipment of smartphones and wearables. Auto business, which is a new growth engine for the company, has maintained growth, with its portion moving up from 5% in 2021 to 7% in '22. It is expected to keep growing by double digits this year with its portion continuing to rise.

由於智能手機和可穿戴設備的出貨量增加，移動和其他產品的份額為 34%，環比增長 9 個百分點。作為公司新增長引擎的汽車業務保持增長，佔比從2021年的5%上升至22年的7%。預計今年仍將保持兩位數增長，佔比繼續上升。

Next is the company's financial position and ratios. The company's cash and cash equivalent was KRW3.547 trillion, staying above the KRW3 trillion line. Inventory was KRW2.873 trillion, decreasing by KRW1.644 trillion Q-on-Q, as a result of the decision to keep inventory at the minimum and the subsequent strong adjustment in production. As for the main financial ratios, debt-to-equity ratio was 215% and net debt-to-equity ratio 101%, both up Q-o-Q.

接下來是公司的財務狀況和比率。公司現金及現金等價物為3.547萬億韓元，維持在3萬億韓元線之上。庫存為 2.873 萬億韓元，環比減少 1.644 萬億韓元，這是由於決定將庫存保持在最低水平以及隨後的生產強力調整所致。主要財務比率方面，資產負債率為215%，淨資產負債率為101%，均環比上升。

Next is cash flow; the company's cash and cash equivalents at the start of Q4 was KRW3.264 trillion. It increased by KRW283 billion and stood at KRW3.547 trillion at the end of Q4, with increased cash flow from financial activities.

其次是現金流；公司在第四季度初的現金和現金等價物為 3.264 萬億韓元。增加了2830億韓元，截至第四季度末為35470億韓元，金融活動產生的現金流量增加。

Last but not least, outlook for Q1, with growing market volatility and demand uncertainty as well as the company's execution of LCD exit strategy, area shipment is expected to fall more sharply than in ordinary seasonality.

最後但同樣重要的是，第一季度展望，隨著市場波動和需求不確定性的增加以及公司執行LCD退出策略，預計面積出貨量將比一般季節性下降得更厲害。

In response to the demand slowdown that will last for some time, the company will keep improving profitability quarter-to-quarter by improving financial soundness and remaining on the path of structural innovation. In addition to KRW1 trillion cost cutting in Q1, we will strive to achieve a turnaround in the second half by helping recover panel demand and utilizing new smartphone capacity.

為應對將持續一段時間的需求放緩，公司將通過改善財務穩健性並繼續走結構創新之路，以逐季提高盈利能力。除了在第一季度削減 1 萬億韓元的成本外，我們還將通過幫助恢復面板需求和利用新的智能手機產能來努力在下半年實現扭虧為盈。

That completes my briefing. Thank you very much.

我的簡報到此結束。非常感謝你。

That brings us to the end of earnings presentation for Q4 2022. We will now take your questions. Operator, please commence with the Q&A session.

這使我們結束了 2022 年第四季度的收益報告。我們現在將回答您的問題。接線員，請開始問答環節。

(Operator Instructions) The first question will be presented by Dongwon Kim from KB Securities.

（操作員說明）第一個問題將由 KB 證券的 Dongwon Kim 提出。

[Interpreted]

[解讀]

I have 2 questions, one each for the company's financial strategy and the large OLED business. The first is about the company's financial plan, including any potential borrowings, following the worsening of the financial performance. And related to that, can you also give us an overview of the CapEx implementation in 2022, and what is the company's plan for CapEx this year? And next is about the large OLED business strategy and also the exit strategy. So if you could also -- if the company can also brief us about the large OLED business strategy, and also what will be the way for OLED to continue to enhance its premium image over LCD, so what would be the strategy to differentiate OLED from LCD?

我有兩個問題，一個是關於公司的財務戰略，一個是關於大型 OLED 業務。首先是關於公司的財務計劃，包括在財務業績惡化後的任何潛在藉款。與此相關，您能否也給我們介紹一下 2022 年的 CapEx 實施情況，以及公司今年的 CapEx 計劃是什麼？接下來是關於大型 OLED 業務戰略以及退出戰略。所以如果你也可以——如果公司也可以向我們介紹大型 OLED 業務戰略，以及 OLED 將如何繼續提升其相對於 LCD 的優質形象，那麼將 OLED 與 LCD 區分開來的戰略是什麼？液晶顯示器？

[Interpreted]

[解讀]

Thank you very much for the question. This is the CFO responding. Now for a company, the -- fundamentally, the financial strategy would be to keep earning revenue from our operations. But now given the nature of the industry and also the market situation, sometimes that is not conducive. So in such a case, and we will try to improve the financial soundness through better cash flow management, which is what we are doing currently. So as for now, the plan is to accelerate our exit strategy in LCD TV, which has been proven to be a marginal business, so as to minimize our potential losses from this business. And we will also keep reducing our investment as well as expenditure and also enhance the efficiency of such costs, so that we will also be able to create the kind of operational structure, that will be in line with the current market situation. Another part of the plan is to minimize our inventory and the working capital, and in order to do that -- and by doing so, we will be able to minimize our cash flow expenditure.

非常感謝你的提問。這是首席財務官的回應。現在對於一家公司來說，從根本上說，財務戰略將是繼續從我們的運營中賺取收入。但現在考慮到行業的性質和市場情況，有時這並不有利。因此，在這種情況下，我們將嘗試通過更好的現金流管理來提高財務穩健性，這就是我們目前正在做的事情。因此，就目前而言，計劃是加快我們在已被證明是邊際業務的液晶電視方面的退出戰略，以盡量減少我們在該業務中的潛在損失。我們還將繼續減少投資和支出，並提高此類成本的效率，以便我們也能夠創建符合當前市場情況的運營結構。該計劃的另一部分是盡量減少我們的庫存和營運資金，為了做到這一點——通過這樣做，我們將能夠最大限度地減少我們的現金流支出。

And some of our recent actions, for example, the termination of the production in the Gen 7 LCD fab, as well as the downsizing of production in Gen 8 LCD fab in China. So these actions are not just about downsizing production, it also entails reducing expenditure or reducing the cost. And by doing so, we intend to reduce cost by about KRW1 trillion in the fourth quarter of this year, as has been explained earlier, by better managing our working capital and improving the efficiency of our cost structure.

還有我們最近的一些動作，比如中國第 7 代 LCD 工廠的停產，以及中國第 8 代 LCD 工廠的生產縮減。因此，這些行動不僅僅是減產，還包括減少支出或降低成本。通過這樣做，我們打算在今年第四季度通過更好地管理我們的營運資金和提高成本結構的效率來減少約 1 萬億韓元的成本，正如之前所解釋的那樣。

And now about the CapEx, I did explain about the principles earlier in the briefing, and that is that for last year and this year, we will be maintaining the minimum ordinary investment, so as to -- that will be necessary to maintain the production facilities. And also maintain the investment for the order-based businesses, for which demand and revenue are pretty much fixed. And also on a cash-out basis, last year, it was KRW5.2 trillion, which was a bit higher than expected.

現在關於資本支出，我確實在簡報的早些時候解釋了原則，那就是去年和今年，我們將保持最低的普通投資，以便——這是維持生產所必需的設施。還要維持對訂單業務的投資，這些業務的需求和收入幾乎是固定的。同樣在現金支出的基礎上，去年為 5.2 萬億韓元，略高於預期。

So for last year on a cash-out basis, it was KRW5.2 trillion, which was a bit higher than expected. But then so what this means is, that this actually is in line with our principle of transitioning more towards the order base business. So we have accelerated our investment timeline for some of the order base business, and this also means that the achievement of revenue or the accrual of the revenue would also be pulled up. So this means that the revenue to occur this year and the year afterwards will also be pulled up as well. So when we look at the cash flow across the next few years, then we will see that the investment expenditure will not go up.

因此，去年以現金支出為基礎，為 5.2 萬億韓元，略高於預期。但這意味著，這實際上符合我們更多地向基於訂單的業務過渡的原則。所以我們加快了一些訂單基礎業務的投資時間表，這也意味著收入的實現或收入的應計也將被拉高。所以這意味著今年和後年的收入也將被拉高。因此，當我們查看未來幾年的現金流量時，我們會看到投資支出不會增加。

And about the funding, so there are some concerns about potential shortage of funds due to our investment plan as well as the current performance. But then regarding that, I would like to assure the investors and the shareholders, that there is no cause for concern, as we are making preparation and also implementing the preparation with regards to the funds aspect as well.

關於資金，由於我們的投資計劃和目前的表現，人們擔心資金可能短缺。但關於這一點，我想向投資者和股東保證，沒有理由擔心，因為我們正在做準備，也在資金方面進行準備。

Now when it comes to investment or the operations of our business, then there are ways in the market that are available aside from borrowing or aside from using our own funds to do so. So when it comes to cash management, once again, I would like to here, assure the shareholders and investors that you do not have to worry about them, because we will be making the best use of the other means and ways that are available in the market.

現在，當涉及到投資或我們業務的運營時，除了借貸或使用我們自己的資金之外，市場上還有其他可用的方法。因此，在現金管理方面，我想再次向股東和投資者保證，你們不必擔心他們，因為我們將充分利用現有的其他手段和方式。市場。

[Interpreted]

[解讀]

This is [Won Jae Lee] in-charge of large display marketing responding to your question about the OLED plan for 2023. In terms of the shipment, shipment of OLED is expected to be similar in 2023 Y-o-Y. But now in the high-end market, the demand is changing, and also given that it is not clear when there is going to be recovery in the demand, we will keep closely monitoring the market and try to continue to differentiate OLED in the high-end TV market, so that we will be able to increase our market share from the current high 20% level to over 30%.

我是大屏營銷負責人[Won Jae Lee] 回答你關於2023年OLED計劃的問題。在出貨量方面，預計2023年OLED的出貨量與Y-o-Y差不多。但現在在高端市場，需求在變化，而且需求什麼時候回暖還不明朗，我們會繼續密切關注市場，繼續在高端市場做OLED差異化。 - 終端電視市場，這樣我們就能夠將我們的市場份額從目前的 20% 的高水平提高到 30% 以上。

And with the goal of improving the healthy level -- improving the inventory level in the -- among the distributors and the set customers, we will be adjusting our production and also trying to reduce the fixed costs, in line with the trends in the actual demand.

並以提高健康水平為目標——提高分銷商和固定客戶之間的庫存水平，我們將根據實際趨勢調整我們的生產，並努力降低固定成本。要求。

And about the business strategy for large OLED; now in terms of the infrastructure, we have already achieved the economy of scale in large OLED, based on which we can compete in the high-end market, meaning that, that is 10 million units. So we have already achieved the economy of scale. And we also see more opportunities still arising in terms of new markets as well as new customers. So we will continue to strengthen our competitiveness and improve profitability -- strengthen our competitiveness and strengthen our structure, so that we will also be able to see profitability from the existing market as well.

以及關於大尺寸OLED的商業策略；現在在基礎設施方面，我們已經在大尺寸OLED上實現了規模經濟，以此為基礎我們可以在高端市場競爭，也就是1000萬台。所以我們已經實現了規模經濟。我們還看到，在新市場和新客戶方面仍有更多機會出現。因此，我們將繼續加強我們的競爭力和提高盈利能力——加強我們的競爭力和加強我們的結構，這樣我們也將能夠從現有市場中看到盈利能力。

And another positive aspect, is the fact that we are also seeing visible results out of our market creating businesses, like gaming and transparent OLED. So these are the new markets that go beyond the existing TV market, as the current TV market continues to remain subdued.

另一個積極的方面是，我們也看到了市場創造業務的明顯成果，例如游戲和透明 OLED。因此，這些是超越現有電視市場的新市場，因為當前的電視市場繼續低迷。

So in short, although demand in the downstream industries remain slow, mostly due to the macroeconomic situation, this is the business segment where there are still potential and many opportunities. So we will continue to strengthen our cost innovation and also strengthen the OLED-specific competitiveness, so that we will be able to keep growing this market as well as the business.

所以簡而言之，雖然下游行業的需求仍然緩慢，主要是受宏觀經濟形勢的影響，但這是仍然有潛力和很多機會的業務領域。因此，我們將繼續加強我們的成本創新，同時加強 OLED 特有的競爭力，以便我們能夠保持這個市場和業務的增長。

And there was also a question about the differentiation of the product, especially between OLED versus LCD. But given the fact that my answer has become quite long winded, I would like to wait for another opportunity to give you more details.

還有一個關於產品差異化的問題，尤其是 OLED 與 LCD 之間的差異化。但考慮到我的回答已經很囉嗦了，我想等下一次機會再給你更多的細節。

The next question will be presented by [Soo-Han Kim from Kim Securities].

下一個問題將由 [來自 Kim Securities 的 Soo-Han Kim] 提出。

[Interpreted]

[解讀]

I also have 2 questions. Now first is about the LCD TV exit strategy and the company explained earlier, how the company has accelerated the execution of this exit strategy. So I believe that as a result of this, it will place the company in a different position from the peers in terms of financial performance. So if you could give us a guidance on the financial performance for the fourth quarter, as well as for the year? And the second question is about the specific business plan. Since the company also discussed the market creating businesses, as well as the plan to strengthen the future business portfolio. So if the company can provide more details about the business plan.

我也有2個問題。現在首先是關於液晶電視的退出戰略，公司之前已經解釋過，公司是如何加速執行這一退出戰略的。因此，我相信，由於這一點，它將使公司在財務業績方面處於與同行不同的位置。那麼，您是否可以為我們提供有關第四季度和全年財務業績的指導？第二個問題是關於具體的商業計劃。由於公司還討論了市場創造業務，以及加強未來業務組合的計劃。因此，如果公司可以提供有關業務計劃的更多詳細信息。

[Interpreted]

[解讀]

Now first, about the outlook for the year, and there is a clear response to this, and it is low in the first half and high in the second half. And now we all know that the macro economy continues to struggle. So then this means that demand is likely to remain slow into the first half of the year. And then also the situation that we had been seeing since last year, where the purchase of panels fell short of the actual sales of sets, we believe that this phenomenon is likely to continue into the first half of the year, as inventory adjustment continues.

先說今年的展望，對此有明確的反應，上半年低，下半年高。現在我們都知道宏觀經濟繼續掙扎。那麼這意味著需求可能會在今年上半年保持緩慢。再加上去年以來一直出現的面板採購量低於實際銷售量的情況，我們認為隨著庫存調整的繼續，這種現像很可能會持續到今年上半年。

Now given this environment, then the -- one of the options given to the company is to go into a large-scale cost cutting. And that is what we have been doing. So in order to reduce the inventory burden, last year, we had reduced the inventory level by about KRW1.6 trillion across 1 quarter. So we believe that, that is going to provide us with positive benefits in the first quarter of this year.

現在考慮到這種環境，那麼——給公司的選擇之一就是大規模削減成本。這就是我們一直在做的。因此，為了減輕庫存負擔，去年第一季度我們將庫存水平降低了約 1.6 萬億韓元。所以我們相信，這將在今年第一季度為我們帶來積極的好處。

In addition to that, we also have taken actions to downsize or reduce production of the large sized business. And we are also cutting costs by rationalizing our business structure. So all in all, I believe that in terms of the innovation or the rationalization of our business and also reducing of the inventory, this will bring about a cost-cutting benefit of about KRW1 trillion in the fourth quarter

除此之外，我們還採取行動縮小大型企業的規模或減少其生產。我們還通過合理化業務結構來削減成本。所以總而言之，我相信就我們業務的創新或合理化以及庫存減少而言，這將在第四季度帶來約 1 萬億韓元的成本削減效益

So at the end of this process, what we are expecting is to see revenue growth start in the second quarter and the loss shrinking. And as a result, we hope to see the beginning of a turnaround in the second half of the year.

因此，在此過程結束時，我們預計第二季度收入將開始增長，虧損將縮小。因此，我們希望在下半年看到轉機的開始。

Now this is the CSO, Hee Yeon Kim, speaking about our business plan. And so I would like to explain our business plan based on the 3 businesses, gaming monitors and transparent OLED and sound solutions.

現在 CSO Hee Yeon Kim 正在談論我們的商業計劃。因此，我想解釋一下我們基於 3 項業務的業務計劃，即遊戲顯示器和透明 OLED 以及聲音解決方案。

Now based on our competitive large OLED, we are trying to target the new business segment, which is the high-end gaming monitor, where the customers are willing to pay more. So we are currently in discussions with around 8 to 9 customers, and our plan is to go into mass production within the year. And second, for the transparent OLED, we are currently targeting the key vertical customers, who can see the importance of these products for retail and construction purposes.

現在基於我們有競爭力的大型OLED，我們正試圖瞄準新的業務領域，即高端遊戲顯示器，客戶願意為此支付更多費用。所以我們目前正在與大約8到9個客戶進行討論，我們的計劃是在年內進入量產。其次，對於透明 OLED，我們目前的目標是主要的垂直客戶，他們可以看到這些產品對零售和建築用途的重要性。

Now for the transparent product, unlike others, this is not something that we can address as standalone products. It's more appropriate as a solution product. So that is why it is important for us to build the right ecosystem, and that is what we are currently discussing with and also cooperating with the important key vertical partners. By doing so, we hope to keep building up the ecosystem and see and achieve visible progress and outcome within the year.

現在對於透明產品，與其他產品不同，這不是我們可以作為獨立產品解決的問題。它更適合作為解決方案產品。所以這就是為什麼建立正確的生態系統對我們來說很重要，這就是我們目前正在與重要的關鍵垂直合作夥伴討論並合作的原因。通過這樣做，我們希望繼續建設生態系統，並在一年內看到並取得明顯的進展和成果。

Next is about the sound solution. Now usually, speakers would require space to be installed. But unlike the traditional products, we have come out with the film type sound solution that will take up less space. And this is the solution that also won the Innovation Award at the CES.

接下來是關於聲音的解決方案。現在通常，揚聲器需要安裝空間。但與傳統產品不同的是，我們推出了佔用空間更小的電影式音響解決方案。而這也是在CES上獲得創新獎的解決方案。

And we believe that there is a particular value to be gained in applications, where the space is limited, in other words, automotive. So the automotive sector is where we are going to concentrate with our film-type sound solution. It can be provided together with OLED or as I mentioned earlier, in automotive or vehicles where the space is limited.

我們相信在空間有限的應用中可以獲得特殊的價值，換句話說，就是汽車。因此，汽車行業是我們將專注於電影類聲音解決方案的領域。它可以與 OLED 一起提供，或者如我之前提到的，在空間有限的汽車或車輛中提供。

The last question will be presented by Simon Woo from Bank of America.

最後一個問題將由美國銀行的 Simon Woo 提出。

[Interpreted]

[解讀]

Now I also have 2 questions, and first of all, thank you very much for the presentation. Now it appears as if the company's trajectory is headed towards Gen 6 OLED. But even in this business, demand is not probably easy to come by, because, first of all, there are competitors and also there is BOE. And also the tablet prices remain lower than smartphones.

現在我還有兩個問題，首先，非常感謝您的介紹。現在看來，該公司的發展軌跡似乎正朝著第 6 代 OLED 邁進。但即使在這個行業，需求也不太容易得到，因為首先有競爭對手，還有京東方。而且平板電腦的價格仍然低於智能手機。

Now given the current environment, then what is the rationale for the company to believe that, the company will be able to have -- we'll be able to drive sales in discussions with the clients for the high-priced OLED products. And the second question is about the recent press reports about the micro OLED. And that there have been reports about how the micro OLED is likely to replace a small OLED in the near future. And of course, that is probably in 2 to 3 years' time, but what does the company see in terms of the possibility of the Gen 6 OLED panel being replaced by micro OLED.

現在鑑於當前的環境，那麼公司相信的理由是什麼，公司將能夠 - 我們將能夠在與客戶討論高價 OLED 產品時推動銷售。第二個問題是關於最近關於微型OLED的媒體報導。並且有報導稱微型 OLED 有可能在不久的將來取代小型 OLED。當然，這可能需要 2 到 3 年的時間，但該公司如何看待 Gen 6 OLED 面板被微型 OLED 取代的可能性。

[Interpreted]

[解讀]

This is CSO, Hee Yeon Kim, and I will be responding to both questions.

我是 CSO Hee Yeon Kim，我將回答這兩個問題。

Second question first, about the press reports on micro OLED. I do not believe that the company is in the position to respond to this particular question. Now having said that, in any market, there are always alternative technologies. And for the TV market as well, there are both OLED and micro LED. And I believe that there is a market size to accommodate both, and the company has been responding to these new developments quite effectively.

第二個問題，關於Micro OLED的媒體報導。我認為該公司無法回答這個特定問題。話雖如此，在任何市場中，總會有替代技術。電視市場也有 OLED 和 Micro LED。而且我相信有一個市場規模可以容納這兩者，並且公司一直在非常有效地應對這些新發展。

Likewise, there are different technological options available in the mobile sector as well. So the company has been making preparation for different types of technology, and when there is a business case to be made and business visibility, and if there are any visible potential with -- in negotiations with the customers, then of course, we will move ahead with this. So allow me to complete my response to this question, by providing you with this, let's say, fundamental response. And last point, we will keep closely monitoring the changes in the market and respond accordingly.

同樣，移動領域也有不同的技術選擇。所以公司一直在為不同類型的技術做準備，當有商業案例和商業可見性，如果有任何可見的潛力——在與客戶的談判中，那麼我們當然會採取行動繼續這個。因此，請允許我通過向您提供這個，比方說，基本回答來完成我對這個問題的回答。最後一點，我們會密切關注市場的變化，並做出相應的反應。

Next is about the question on IT OLED. Now this is the segment where we need to maintain not only the short-term perspective, but also the mid to long-term perspective because it involves not only tablet, but also monitors and notebooks as well.

接下來是關於IT OLED的問題。現在這個細分市場，我們不僅要保持短期的眼光，還要保持中長期的眼光，因為它不僅涉及平板電腦，還涉及顯示器和筆記本電腦。

Now in terms of the monitor segment, we will also start targeting the gaming monitors, which is a premium market, where the customers are willing to pay more. So this is the segment that we will start targeting and tablet is a part of that.

現在在顯示器部分，我們也將開始瞄準遊戲顯示器，這是一個高端市場，客戶願意為此支付更多費用。所以這是我們將開始定位的細分市場，平板電腦是其中的一部分。

And looking at the mobile case, we see that the BOE's market share is now about 30% in the high-end segment. Of course, there had been concerns of the premium price and also concerns about the potential scalability. But then I believe that there has been value up from the set maker side, and we believe that, that is how it was able to increase the penetration, and we believe that the same development could occur in the tablet segment as well. But at the same time as the questioner has rightly pointed out, the high-end payment value in tablet monitors or in notebooks, would be lower than for the smartphones. And also, the used cases might be limited still. So we would be looking into the different factors and the circumstances, and try to come up with a rational prospect for penetration rate, and also set our business plan and strategy accordingly.

而在手機殼上，我們看到京東方在高端領域的市場份額現在約為30%。當然，有人擔心溢價，也擔心潛在的可擴展性。但後來我相信，設備製造商方面已經產生了價值，我們相信，這就是它能夠提高滲透率的方式，我們相信平板電腦領域也會出現同樣的發展。但同時正如提問者正確指出的那樣，平板顯示器或筆記本電腦的高端支付價值將低於智能手機。而且，用過的案例可能仍然有限。因此，我們會研究不同的因素和情況，並嘗試對滲透率做出合理的預測，並相應地制定我們的業務計劃和戰略。

[Interpreted]

[解讀]

If there are no further questions, we will now close Q4 2022 earnings conference call. Thank you once again for joining us today. Please do contact us at the IR team for any additional questions. Thank you.

如果沒有其他問題，我們現在將結束 2022 年第四季度收益電話會議。再次感謝您今天加入我們。如有任何其他問題，請聯繫 IR 團隊。謝謝你。