LG Display Co., Ltd.
Q1 2012 Earnings Call Transcript

Published: 7 May 2012

[Operator:]

Good morning, and good evening. First of all, thank you all for joining this conference call and now we’ll begin the conference of the Fiscal Year 2012 First Quarter Earnings Results by LG Display. This conference will start with a presentation followed by a division of Q&A session. (Operator Instructions) Now, we shall commence the presentation on the fiscal year 2012 first quarter earnings results by LG Display.

[Hee-Yeon Kim:]

Welcome to LG Display first quarter year 2012 conference call. My name is Hee-Yeon Kim, Head of IR Department. On behalf of LG Display, I would like to welcome everyone to our global quarterly earnings conference call. I am joined by our IR staff as well as representatives from TV Marketing and IT Marketing. J.S. Park is heading up the TV Marketing Department. Kevin Oh is Vice President of IT Marketing Department. Next slide, please. Before we move on to the earnings results, please take a minute to read the disclaimer. I would like to remind everyone that results are based on the consolidated IFRS accounting standards and are un-audited. Next slide, please. This conference call will take an hour. Before we go into the Q&A session, please allow me to highlight our first quarter year 2012 results, performance highlight and outlook. Originally, our panel shipment for first quarter was expected to be similar to the fourth quarter with channel inventory restocking demand and new model lineup by set makers as well as launch of our differentiated products. However, some delay in the schedule of differentiated product and new model development resulted in 4% shipment decrease. Operating loss continued while panel price remained stable at a slight decline all in the quarter. Cost reduction recorded low single-digits. There is improvement effort to increase competitiveness in first quarter affected the results negatively due to some delay of new model shipments. As most of the issues have been already resolved, we expect these efforts to bear fruit in second quarter leading to the meaningful improvement in the results. Looking at second quarter, the demand is expected to be stronger, while the inventory level industry-wide remains low. Order from our customers is expected to be strong with new model lineup in preparation for the sports events. As the portion of differentiated products including FPR 3D panels for smart devices continues to expand in an improving market situation, we expect to turn profit in second quarter. However, as the global economic scale remains uncertain, there are some uncertainties in the market, which could potentially impact the panel shipments. Looking at the overall Display industry, we feel it is indisputable that LCD has entered maturity and slow growth stage. LG Display is carefully carrying out thorough analysis in the strategic direction and investment plans with the following three points under consideration; number one, the optimization of the existing LCD business; number two, taking leadership in the larger OLED TV market; and number three, finding future growth engines. China investment which is to be carried out in the near future will also be a part of LCD business optimization by expanding access to the China market and obtaining cost competitiveness. We will tell you more about these long-term strategic direction and investment plans in the next quarter earnings. Now moving on to our financial results, on page seven – page three, revenue in the first quarter was KRW6.6 trillion down 6% quarter-on-quarter. The demand was strong compared to traditional seasonality, however, delay in the differentiated products and new model development schedule resulted in manufacturing capacity decline. This resulted in 4% shipment decline compared to the previous quarter. After panel prices dropped slightly in the all the months, it remained stable throughout the quarter. Operating loss increased to KRW178 billion and operating margin to minus 3%, while EBITDA margin remained stable at 13%. Net income was minus KRW129 billion. Moving on to slide four looking at our financial position and ratios. Cash and cash equivalents rose by KRW60 billion to KRW2.4 trillion. Inventory was maintained at its highest level at KRW2.2 trillion. Debt level rose slightly, recording a net debt to equity ratio of 29%. Moving on to slide five, looking at our cash flow, cash at the beginning of the quarter was KRW2.3 trillion. Cash flow from operating activities resulted in cash inflow of KRW656 billion. Cash flow from investing activities resulted in an outflow of KRW1.3 trillion. And cash flow from financing activities resulted in an inflow of KRW677 billion. As a result, the net change in cash was inflow of KRW60 billion. Moving on to our shipment and ASP on slide six. Looking at our shipments, it decreased by 4% quarter-on-quarter, recording 8.1 million square meters. This is due to the temporary capacity allocation for the development of differentiated products and new developments. ASP based on LCD module price remained flat at a slight decline all in the quarter. And it recorded $669 in first quarter, a 2% quarter-on-quarter decrease. Moving onto our product mix on slide seven. In first quarter, TV product mix is 47%, Monitor 21%, Notebook 15%, Tablet 5%, Mobile 12%. New tablet PC shipments in the first quarters suffered a temporarily delay in production, which reduced the revenue portion in first quarter. However, as the normal shipping is to begin in the second quarter, the revenue percentage is expected to rise back to the previous level. Moving on to slide eight and looking at our capacity. Our manufacturing capacity decreased 8% quarter-on-quarter to 10.2 million square meters due to the shorter number of working days in addition to temporary capacity allocated to the development of differentiated product and new models. Next, we turn to our outlook section. We expect better demand in second quarter as customers prepare for new model lineups before the sporting events while industry inventory remains low. We expect our total shipments to increase by around 10% quarter-on-quarter and ASP to show a slight upward trend. This quarter, LG Display established the foundation for strength and competitiveness with an approach emphasizing differentiated products as well as new models. With the foundation that we’ve laid on top of the improved market situation, we expect to show better results and began moving towards a turnaround in the second quarter. As always, LG Display will continue to lead the industry with its differentiated and world class products. With that, I will end my summary of first quarter and future outlook and would be happy to take your questions. To use the time efficiently, please limit to three questions per person. Operator, proceed to Q&A session please.

[Operator:]

Now, Q&A session will begin. (Operator Instructions) The first questions will be provided by Mr. Matt Evans from CLSA. Please go ahead, sir.

[Matt Evans:]

Hi, good evening. Thanks for taking my call. First question is in reference to your comment that some new products were delayed in the first quarter. And you said that the issues are mostly resolved and things will be normal in this quarter. So do you mean by that that already in April those issues are resolved, and you’re now able to ship those delayed products? Or is it something that you’re just saying during the quarter at some point before the end of June, you will be shipping those products?

[Hee-Yeon Kim:]

As I mentioned before it’s already resolved, the shipment was already started in April.

[Matt Evans:]

Okay. And so the shipments, can you comment as to whether they’re at sort of mature volumes, mature yields or is it still sort of ramping up?

[Hee-Yeon Kim:]

Yes, definitely. We are okay in terms of yield and other things; everything is okay.

[Matt Evans:]

Okay. And I wondered if you could elaborate on the first of the three strategies you mentioned in terms of optimizing the existing business? Could that mean for example, no longer producing 32-inch commodity TV panels and using your capacity for more value-added products?

[Hee-Yeon Kim:]

Actually the philosophy for the optimization of LCD is, yes, we will move towards the valuable product segmentation. However, it doesn’t mean we will not do any more for the 32-inch. What I’m trying to say is we will be more focused on the valuable products such as differentiated products. We don’t have any specific size and categories yet.

[Matt Evans:]

Okay. My third question is can you give us some sense sort of how you are thinking about capacity going forward? I understand you have this sort of trade-off where if you convert an LCD fab to OLED or if you move equipment from Korea to China then your capacity will reduce, but on the other hand you don’t want to increase your gross capacity because the industry is over – already oversupplied. So, can you help us understand how you’re thinking about that trade-off and what the various strategies could be?

[Hee-Yeon Kim:]

Actually it’s obviously difficult to mention about overall capacity trend because we are not finalized yet, but our strategic movements including OLED fab and China’s fab. However, anyway may be this year and next year we will do some of the investment activity such as OLED work or China fab work, both of them, but anyway we will try to limit our LCD capacity and we’re not highly unlikely to increase the LCD capacity anymore. So, if we will do any – we will make – we will do our decision making for the China fab, the total LCD capacity will remain stabilized.

[Matt Evans:]

So that means that if you convert one of the existing fabs for example then you would buy new equipment to keep the LCD capacity constant, is that what you are saying? Or are you saying it could only go down?

[Hee-Yeon Kim:]

Actually if we have any new capacity increase for the LCD, it means that we might have a high potential of LCD conversion to OLED. So all-in-all the function of the LCD and OLED capacity increases should remain flat going forward.

[Matt Evans:]

Okay. Thank you.

[Operator:]

The following questions will be presented by Mr. Andrew Abrams from Avian Securities. Please go ahead, sir.

[Andrew Abrams:]

Hi. Could you just talk about CapEx in general for this year? Do you expect any changes in your cash-out CapEx. I think you were talking about KRW4 trillion originally?

[Hee-Yeon Kim:]

For now we don’t have any material change. It is still KRW4 trillion, but right now we are in the process of our – reviewing our strategic forecast. So if there is some decision making for the OLED or other things, yes, there is some possibilities it would be changed, but we cannot expect any material change, maybe it should be around KRW4 trillion or slight over KRW4 trillion.

[Andrew Abrams:]

And in terms of your first quarter and expected second quarter costs down, can you give us some indication there?

[Hee-Yeon Kim:]

Every quarter we are targeting low single or mid single-digit cost reduction. But in first quarter our cost reduction was mid – low single digit. We are targeting similar level in second quarter as well.

[Andrew Abrams:]

And is that both on the material side and on the design side or is it toward one side or the other of those?

[Hee-Yeon Kim:]

All sides.

[Andrew Abrams:]

Okay. And lastly, on your potential plans for China, the facility that you would build there just to make sure I understand this correctly, would essentially be replacing OLED – converted OLED capacity somewhere else. So the LCD side, even if you did do the China fab would stay roughly the same regardless of what the OLED capacity is, I just want to make sure I understand that. And if in fact you did make a decision on China, would that actually – would the construction start this year and how long do you think that process would take before you were up and running?

[Hee-Yeon Kim:]

In conclusion, we will build the China fab, yes, we already have a conclusion for the China fab issue, but how many multiples improve or the China fab will be new fab or not, this is not decided yet. So, all-in-all, as I mentioned before, Korean and China fab total capacity should not be that different from now.

[Andrew Abrams:]

Okay. So, it’s a zero sum even with the China fab, that’s just kind of where I was going.

[Hee-Yeon Kim:]

Actually it can be minus capacity or slight plus capacity. It’s totally depending on the Asian market demand situation.

[Andrew Abrams:]

Got it. And no timing has been set yet, is that correct?

[Hee-Yeon Kim:]

In this year, we will do our China fab. We will start the China at groundbreaking.

[Andrew Abrams:]

Sometime this year for groundbreaking. Okay. Thanks very much. I appreciate it.

[Operator:]

The following questions will be presented by Mr. Jeffrey Toder from RBS. Please go ahead sir.

[Jeffrey Toder:]

Hi. Good evening. Few questions. Kind of back to the capacity question, but a narrower timeframe. There was a sharp drop in capacity and you gave some reasons for that in first quarter. Do you expect the second quarter capacity figure to return to the fourth quarter figure, or do you expect it still below that number?

[Hee-Yeon Kim:]

Our second quarter capacity should be similar as Q4 numbers.

[Jeffrey Toder:]

It would be similar to Q4 numbers. Okay.

[Hee-Yeon Kim:]

Different numbers.

[Jeffrey Toder:]

Okay. And then, I know we’ve this question about three times, but I just want to make sure I’m clear on this. So when you talk about long-term capacity staying roughly static you’re talking about total capacity of combined LCD and OLED, is that correct?

[Hee-Yeon Kim:]

Yes.

[Jeffrey Toder:]

Okay. Good. Okay. Let see – and a few housekeeping questions just to get out of the way, your utilization rate in first quarter?

[Hee-Yeon Kim:]

Low 90%, low to mid 90% based on our production capacity.

[Jeffrey Toder:]

Okay. Good. And when you gave your ASP guidance, is that on a like-for-like area basis or is that on a blended basis?

[Hee-Yeon Kim:]

Sorry?

[Jeffrey Toder:]

Your ASP guidance, is that on a...?

[Hee-Yeon Kim:]

ASP guidance?

[Jeffrey Toder:]

Yeah. Is that on a like-for-like basis or a blended basis?

[Hee-Yeon Kim:]

It’s apple-to-apple basis.

[Jeffrey Toder:]

Okay. And on a blended basis since as you mentioned you will be ramping up some new products, what would you expect your – how would you expect your ASP to perform?

[Hee-Yeon Kim:]

In first quarter or in second quarter?

[Jeffrey Toder:]

Second quarter, first quarter is already down.

[Hee-Yeon Kim:]

Second quarter. In first quarter our product mix was very similar, so blended ASP and apple-to-apple price change was very similar, but in second quarter, we already guided apple-to-apple price is likely to rebound, the blended ASP is likely to rebound at low to mid single-digit.

[Jeffrey Toder:]

Okay. Good. Can you – okay, so no changes on the OLED front. Did you give at the local meeting any guidance as to when the ground breaking in China would occur?

[Hee-Yeon Kim:]

China?

[Jeffrey Toder:]

China ground breaking, you said this year...

[Hee-Yeon Kim:]

China, yes...

[Jeffrey Toder:]

Is that like second quarter or is that like fourth quarter?

[Hee-Yeon Kim:]

It’s not decided yet for now, but maybe it will be soon.

[Jeffrey Toder:]

Okay. And is ground breaking in China included in your – and whatever you’re going to do already included in this year’s CapEx forecast?

[Hee-Yeon Kim:]

Yes, it is already included, but amount is very negligible because most of the cash outflow will be done in next year.

[Jeffrey Toder:]

Okay. Good. Makes sense. Okay. Now for depreciation, so P98 is coming online, so you expect depreciation I think to increase in 2Q, can you give a guidance figure for that?

[Hee-Yeon Kim:]

Yes, we are scheduled to ramp up P98 fab in May. So roughly our monthly depreciation expense for P98 is around KRW30 billion, so you can calculate quarterly numbers.

[Jeffrey Toder:]

Okay, so that starts in May, okay. Great. That’s really good. Okay, and let’s say just one other – two other quick ones, sorry. When you mentioned in your strategic initiatives your third one was fund future growth engines. And that, of course, is excluded from optimization of existing business and OLED leadership. What kind of other growth engines would you be referring to?

[Hee-Yeon Kim:]

For that area is only to mention about there, so that’s why I mentioned that we will more – we will give you more ideas next conference call, deliver our ideas.

[Jeffrey Toder:]

Okay. Are those factors all related to display or could you look at other types of businesses that use similar processes?

[Hee-Yeon Kim:]

We can cover other types of business, but it will be related our display business.

[Jeffrey Toder:]

Okay. And I wonder if you could just go over your global forecast for capacity demand growth and also for tablet, notebook, monitor and TV shipment numbers.

[Hee-Yeon Kim:]

Jeffrey, you’re already over three questions. Please call us later for the numbers.

[Jeffrey Toder:]

Okay.

[Hee-Yeon Kim:]

Thank you.

[Operator:]

The next question will be presented by Mr. Daniel Chung from SK Securities. Please go ahead sir.

[Daniel Chung:]

Hi. Thanks for taking my question. I have two quick questions on OLED and one on LCD. My first question on OLED is, will there be any other TV sizes released other than 55-inch that you announced, will there be, yeah? And my second question is, I know it’s little bit early to talk about profitability for OLEDs, but when you release TV panels in the second half, is there a possibility that you will be selling them at a loss? And also for LCD, can you tell us the specialty panel portion for the first quarter and your plans for the second quarter?

[Hee-Yeon Kim:]

Right now, we only have 55-inch OLED television size, because our capacity is very limited.

[Daniel Chung:]

Okay.

[Hee-Yeon Kim:]

And it’s very early to mention about the profitability related to the OLED side, it’s very initial stages. And also its ratio should not be that high, so if we mention about the profitability for the OLED side it should be better maybe next year.

[Daniel Chung:]

Okay.

[Hee-Yeon Kim:]

And for differentiated product portion in Q1, it is low 40%. And lower than 40%. In Q2 it might be close to 50%.

[Daniel Chung:]

Okay. Is there a possibility that it could be over than 50%, or is it more close to 50% or is it more close to 45%?

[Hee-Yeon Kim:]

Close to 50%.

[Daniel Chung:]

Okay. Thank you very much.

[Operator:]

The following questions will be presented by Mr. Matt Evans from CLSA. Please go ahead, sir.

[Matt Evans:]

Thanks. I wanted to ask if the flexible OLED is considered – if you categorize that under future growth strategy/new business, or is that under the second point? And – yeah.

[Hee-Yeon Kim:]

Definitely.

[Matt Evans:]

That’s considered a new – potential new growth rather than your existing business, right?

[Hee-Yeon Kim:]

Especially with the flexible they should be within new growth engine areas.

[Matt Evans:]

Okay. And could you give us the mother glass input for P9 in 2Q and 3Q?

[Hee-Yeon Kim:]

P98’s mother glass input, in an early stage it should be 15 or 20K and the full scale it should be 60K.

[Matt Evans:]

Okay. And can you comment at all on any plans to produce high PPI, so-called retina type displays for notebooks in the next six months. Is that something in your schedule?

[Unidentified Company Representative:]

Yes, but very limited of the quantity. However, the customers who request for the high PPI panels for the notebook is growing continuously and we believe that next year the more quantity is expected for the high PPI panels.

[Matt Evans:]

Could you give us a range of the – roughly what the PPI would be, that you’re talking about. And perhaps what the current PPI is in mainstream books just to give us a sense of the increase?

[Unidentified Company Representative:]

Actually there are so many various PPIs which the customers are requesting. But the – we believe around 200 or 200-something PPI would be like quite popular next year.

[Matt Evans:]

Okay. Thank you very much.

[Operator:]

Currently, there are no participants with questions. (Operator Instructions) The following questions will be presented by Mr. Jeffrey Toder from RBS. Please go ahead, sir.

[Jeffrey Toder:]

Hi, so I can ask my last question again. Can you give your forecast for 2012 capacity and demand increase as well as shipments by segments?

[Hee-Yeon Kim:]

By segment?

[Jeffrey Toder:]

Yeah, like tablet, notebooks, monitor and TV

[Hee-Yeon Kim:]

Yes, in terms of capacity we don’t have any individual capacity size; we only have a total capacity. In terms of the industry capacity growth, this year we’re expecting that 5% capacity growth and demand growth which should be around 10%. By application, we only have shipments growth, namely demand growth. Television we are expecting 10% shipment growth and monitor 2% – low 2%; notebook mid single-digit; smartbook is close to 50%.

[Jeffrey Toder:]

Okay. And that’s panels or units?

[Hee-Yeon Kim:]

Based on panel shipment.

[Jeffrey Toder:]

Okay. Great. Okay, that was my last – well, one other question actually. For touch, in-cell can you tell me where you are on that and when you do you plan to be in commercial production?

[Hee-Yeon Kim:]

In case of in-cell we’re already ready for the R&D and the production base. So we are waiting for the final confirmation from our customers.

[Jeffrey Toder:]

Okay. And I assume this is for small size for handset size. When do you think you might be ready for say a smartbook type product...

[Hee-Yeon Kim:]

Actually – for that question please understand also we cannot mention about that issue.

[Jeffrey Toder:]

Okay. Great. Thank you very much.

[Operator:]

The following questions will be presented by Mr. Andrew Abrams from Avian Securities. Please go ahead, sir.

[Andrew Abrams:]

Thank you. I am sorry. I just missed what you said about capacity and the individual groups. If I heard it correctly you said total capacity increase for 2012 for you would be 5% or is that for the industry overall?

[Hee-Yeon Kim:]

Industry 5% and also our capacity growth is around 5%.

[Andrew Abrams:]

And on the demand side you said 10% for the industry and similar for yourself I assume?

[Hee-Yeon Kim:]

No, in case of industry it is around 10%, but in case of LG Display, it’s around 20%.

[Andrew Abrams:]

Okay. And in terms of the individual, I heard – I thought I heard you say monitors plus 2%, smartbooks 50%, but I missed the first one, which one was that?

[Hee-Yeon Kim:]

Television 10%.

[Andrew Abrams:]

TV, 10%. Okay. Thanks very much. I appreciate – oh I am sorry. Just what about if you look at the small panel markets meaning anything under – 10 inches or 9.7 inches would you have growth number for that?

[Hee-Yeon Kim:]

Your question is for the smartphones and small sized tablets?

[Andrew Abrams:]

Yeah. Right.

[Hee-Yeon Kim:]

We are expecting this should be 40% y-o-y.

[Andrew Abrams:]

Plus 40% year-over-year.

[Hee-Yeon Kim:]

Yes. It’s all mostly smartphones.

[Andrew Abrams:]

Right. So there is – it’s getting harder to kind of put those in separate categories the small panel versus the smartbooks and things like that, but – so 40% there and 50% for smartbook. Terrific. Thank you very much, appreciate it.

[Operator:]

The following questions will be presented by Mr. Matt Evans from CLSA. Please go ahead, sir.

[Matt Evans:]

Thanks, again. One of your competitors or perhaps two of your competitors seem to be getting good initial demand for 39-inch and 50-inch panels. My understanding is that you probably can’t make these in the short-term because your capacity is committed, but you might be able to manufacture them next year. Could you comment on that at all?

[JS Park:]

I think 50-inch we have a potential to increase the volume because of industry side we have lots of potential capacity. But, however, 39-inches the volume will be limited because there is only Gen-6 lines for 39. And also 50-inches global whole set makers are trying to launch that product but 39-inch only for – mainly for Chinese makers, so 50-inch is bigger than 39, I think.

[Matt Evans:]

Okay. And with regard to the Windows 8 tablets and sorry notebooks. Is there a potential to ship notebook panels with touch in volume in the next 12 months?

[JS Park:]

Yes, but for the notebook, not in-cell but different type of touch.

[Matt Evans:]

Okay. Could you give us any sense of the size of that market in the next 12 months? Would that be very niche or could that be something that becomes mainstream for ultrabooks in 2013 for example.

[Unidentified Company Representative:]

Actually we’re also investigating on that demand with our customers, but our customers also do not have a concrete number yet. So we need to wait and see for the touch notebook demand of cost point.

[Matt Evans:]

Okay. And finally could you give us an update on oxide TFT, what the conversion capacity schedule is or anything like that and in particular if you will be shipping any oxide TFT TV panels this year?

[Hee-Yeon Kim:]

Well, there is size – right now internal we are in talks with that kind of conversion, but is finalized yet. As I mentioned before we will give you more clear idea next conference call.

[Matt Evans:]

Okay. Thank you.

[Operator:]

Currently, there are no participants with questions. (Operator Instructions) The following questions will be presented by Mr. Matt Evans from CLSA. Please go ahead, sir.

[Matt Evans:]

Sorry, hello yes, I think in the Korean briefing you briefly talked about color filter and array; could you give us a sense of how quickly you’re introducing that for LCD and what the benefits are of that in terms of cost reduction or performance?

[Hee-Yeon Kim:]

In the TV side, with a limited portion we adapted this color and – color filter on TFT process to reduce our processing cost. But in first quarter it is very complicated to quantify our cost reduction because it is mingled with the new growth because it is the initial stage. In second quarter we hope either give a chance to reduce our cost in that product, but unfortunately that product portion is very limited at around, at low 10% among total TV shipments. The total cost reduction impact is not that big but eventually we will move to that kind of a process; the cost reduction should be meaningful.

[Matt Evans:]

And does that allow you to buy cheaper glass for the color filter side or?

[Hee-Yeon Kim:]

No. No, we have to use a similar quality glass now, but potentially possible in the future.

[Matt Evans:]

I see. Okay. Thank you.

[Operator:]

The next questions will be presented by Mr. Kim Dong – from UBS Securities. Please go ahead, sir.

[Kim Dong:]

Thank you very much. I have three simple questions. Firstly, how much inventory did you have at the end of the first quarter compared to the last quarter in terms of days? And secondly – sorry, we are hearing that the panel makers have been pressuring glass makers on the pricing recent quarters or months. So how did your glass sourcing enterprise move in the first quarter; that was my second question? And third question would be, if I understand correctly, depreciation expenses from our old Gen 8 fab will start to roll over from early next year around March or April, could you please let us know how much depreciation decline we can expect from here, if we ignore the increased depreciation from the new China fab?

[Hee-Yeon Kim:]

The inventory holding period, in Q4 it’s over – it is slight over four weeks and first quarter it is slight over three weeks. And your second question is the price of glass...

[Kim Dong:]

Yeah.

[Hee-Yeon Kim:]

Cost reduction ratio? The glass cost reduction nowadays is a bit easier than other component side, but unfortunately we cannot give you the detailed numbers. But anyway, it is meaningful cost reduction for – price reduction for the glass side in first quarter. Maybe if you have the numbers from our supplier side, they should be correct.

[Kim Dong:]

Sure.

[Hee-Yeon Kim:]

Your third question – you asked too many questions I cannot remember your question, sorry about that. Your third question is P81?

[Kim Dong:]

Yeah.

[Hee-Yeon Kim:]

When will the depreciation will be terminated?

[Kim Dong:]

Yes and also how much.

[Hee-Yeon Kim:]

How much? Actually, it is finalized in first quarter year 2013 in terms of depreciation. And among our P81 deprecation per quarter, that is KRW190 billion per quarter. So, maybe in second quarter next year we don’t have any depreciation expense for P81.

[Kim Dong:]

How about the P8-2, is it from 2014?

[Hee-Yeon Kim:]

Yeah. That’s only 2014.

[Kim Dong:]

Thank you very much.

[Operator:]

The following questions will be presented by Mr. Marco Tobesan from Barclays. Please go ahead, sir.

[Marco Tobesan:]

Hey. I just wanted to ask the first question on the glass prices. I think you mentioned on the – your outlook on the first quarter, but could you give me idea on the next quarter or the second quarter? And I just want to make sure that the price pressure would be stronger than the other devices, am I correct? Those two questions, thanks.

[Hee-Yeon Kim:]

Your question is specifically for the glass side. So as I mentioned before in overall cases our cost reduction should be low to mid single-digits in a quarter, we cannot give you any specific numbers for specific component side, please understand it is the situation.

[Marco Tobesan:]

And so this number is for 2Q or the first quarter?

[Hee-Yeon Kim:]

First quarter and 2Q as well.

[Marco Tobesan:]

Okay. So the price decline would not be – would be about the same for first quarter and second quarter?

[Hee-Yeon Kim:]

We hope we can do. We will have a same level cost reduction in second quarter. We try to.

[Marco Tobesan:]

All right. Thank you.

[Operator:]

The following questions will be presented by Mr. Andrew Abrams from Avian Securities. Please go ahead, sir.

[Andrew Abrams:]

Just a follow-up on the glass question. Over the last two quarters have you made any major changes in your glass suppliers and has that been an influence on price or was it just on a general basis that price has declined on the glass side?

[Hee-Yeon Kim:]

Actually from second of last year, yes, we have some material change among glass suppliers. So, our preference, yes, in the business area, affordable price offer will be a best choice for us if their quality would be the same.

[Andrew Abrams:]

So, as far as you’re concerned going forward, you could either stay the way you are or return back to where you were before as long as prices – price and quality are the same going forward?

[Hee-Yeon Kim:]

Yes. I think all the business relationships will follow the natural common sense.

[Andrew Abrams:]

Got it. Okay. Thanks very much.

[Operator:]

The next question will be presented by Mr. Matt Evans from CLSA. Please go ahead, sir.

[Matt Evans:]

Thanks again. Could you talk a little bit about your open-cell business, is that increasing this year? It seems to be an industry trend.

[JS Park:]

Currently, we are not decided what size and how much volume we are going to start, but the open-cell business is a kind of business trends we are considering not next year. We’re going to fix Q2 this year.

[Matt Evans:]

And would you say that that’s more driven by the customer demand or more driven by you guys trying to reduce costs?

[JS Park:]

Most our strategies are driven by our customer because they’re going to reduce cost using their lines – record and process line those were except combined line.

[Matt Evans:]

Is that potentially moving some of the value from the panel maker to the customer. How should we think about that?

[JS Park:]

In generally, yes. But considering all that, we change the game.

[Matt Evans:]

Right. So, is this a risk for LG Display?

[JS Park:]

I don’t think so.

[Matt Evans:]

Okay. And another question I had it could you comment on sell-through based on any data you may have seen or from internal research in China and Europe particularly, but also the U.S., perhaps you could frame that in terms of what you’re expectations would have been a month or two ago?

[JS Park:]

Your question is sell-through growth rate quarter-over-quarter year-over-year by region?

[Matt Evans:]

I’m just – really I’m interested to know if it’s trending in line with expectations or better or worse, really rather than a specific number versus what you would have budgeted for at the beginning of the year perhaps or the beginning of the quarter?

[JS Park:]

Okay. I just in charge of TV, so I’m going to talk about TV and in overall sell-through demands slightly lowers our expectations. But by region, U.S. is better than our expectation and Japan almost same. However, China is a little lower than our expectations. And we expect that Q2 it will be okay and almost slight – I think it’s a slight higher than our previous expectations.

[Matt Evans:]

And how about Europe?

[JS Park:]

Europe, 2011 was demand itself very low, so because we think Q2 in West Europe demand will be grow, but also the Euro Cup and Olympics, we expect around high single digit or lower to the growth rate that we are expecting in Europe, including CIS and East Europe.

[Matt Evans:]

And so far this year has Europe been in line with your expectations would you say or is that one of the?

[JS Park:]

Yes, West Europe a little lower than our expectation, but East Europe and CIS still fast growing area.

[Matt Evans:]

Okay. And could I also ask the same question for notebook and monitor perhaps panel demand, but also similar end demand, you see that trending a bit better than expected three months ago or better or worse?

[JS Park:]

Actually the global yearly demand was same as before the – as we already explained, but Q2 is little bit strong because most of the customers are trying to build up for the back-to-school demand in advance, since they are trying to reduce the costs, lowest cost. So they are trying to ship by that date. And region wise like TV, U.S. is strong and China little bit lower than our expectation. In case of Europe still slow, but better than our expectation.

[Matt Evans:]

That’s very helpful. Thank you very much.

[Operator:]

Currently, there are no participants with questions.

[Hee-Yeon Kim:]

Operator, if there is no participants waiting, we will end this conference call.

[Operator:]

Yes. You can wrap up the conference call. Yes. On behalf of LG Display, we thank you for your participation in the first quarter earnings conference call. Should any have any further questions, please contact either myself or my colleagues. Thank you.