LG Display Co., Ltd. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on February 18, 2014, reports on the activities of LG Display Co., Ltd. (LGD) for the fiscal year ended December 31, 2013. The filing includes the attendance records of outside directors, related party transactions, and the full consolidated and separate financial statements for FY2013. LGD is a global leader in the research, development, and manufacture of display panels, primarily utilizing TFT-LCD and OLED technologies. The company operates production facilities in Paju and Gumi, Korea, with subsidiaries across the Americas, Europe, and Asia.
Key Financial Metrics (FY2013)
Financial data is presented in Korean Won (KRW) millions unless otherwise noted.
| Metric | 2013 | 2012 |
|---|---|---|
| Revenue | 27,033,035 | 29,429,668 |
| Gross Profit | 3,508,184 | 3,004,912 |
| Operating Profit | 1,163,314 | 912,368 |
| Net Profit (Consolidated) | 418,973 | 236,345 |
| Net Profit (Separate Entity) | 99,672 | 28,549 |
| Operating Cash Flow | 3,584,773 | 4,569,695 |
| Free Cash Flow (Approx.) | (919,548) | 597,216 |
| Total Assets | 21,715,284 | 24,455,511 |
| Total Liabilities | 10,917,864 | 14,215,331 |
| Shareholders' Equity | 10,797,420 | 10,240,180 |
Note: Free Cash Flow calculated as Operating Cash Flow less Acquisition of Property, Plant, and Equipment.
Material Changes vs. Prior Period
- Revenue Decline: Consolidated revenue decreased by approximately 8.2% to 27.0 trillion KRW, driven by market conditions in the TFT-LCD industry.
- Profitability Improvement: Despite lower revenue, Operating Profit increased by 27.5% to 1.16 trillion KRW, and Net Profit rose by 77.3% to 419 billion KRW. This was primarily due to improved gross margins (13.0% in 2013 vs. 10.2% in 2012) and cost management.
- Balance Sheet Strength: Total liabilities decreased significantly by 23.2% to 10.9 trillion KRW, while equity increased by 5.4%. Cash and cash equivalents decreased to 1.02 trillion KRW from 2.34 trillion KRW, largely due to capital expenditures and increased bank deposits.
- Capital Expenditure: Cash used in investing activities increased to 4.5 trillion KRW, reflecting continued investment in production capacity and technology.
Outlook, Risks, and Management Commentary
- Market Conditions: Management notes the TFT-LCD business is highly cyclical. While traditional IT product markets (notebooks, monitors) have stagnated, demand for displays in tablets, smartphones, and televisions continues to grow.
- Technology Strategy: LGD is focusing on differentiated value through 3D technology, touch screens, and next-generation displays. The company was the first to supply 55-inch OLED 3D TV panels in January 2013.
- Corporate Governance: The filing details the 29th Annual General Meeting scheduled for March 7, 2014. Agenda items include the approval of FY2013 financial statements and the reappointment of directors, including outside director Jin Jang.
- Risks: Key risks include the cyclical nature of the industry, supply-demand imbalances affecting pricing, reliance on a limited number of major end-brand customers, and foreign exchange rate fluctuations.
Investor Verification Checklist
- Market Share Stability: Verify LGD's reported market share in large-sized TFT-LCD panels (28.1% in 2013) against independent industry reports (e.g., DisplaySearch).
- OLED Transition: Assess the progress and commercial viability of OLED investments relative to the declining LCD market.
- Related Party Transactions: Review the significant transaction volumes with subsidiaries (e.g., LG Display America, Germany, Japan) and affiliates (LG Electronics, LG Chem), which accounted for a substantial portion of total assets.
- Cash Flow Sustainability: Analyze the negative free cash flow in 2013 to ensure capital expenditure levels are sustainable given the current cash position.
- Debt Structure: Confirm the terms and maturity profiles of the non-current financial liabilities (approx. 3.0 trillion KRW) and long-term advances received.