LG Display Co., Ltd. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on November 15, 2012, contains the translated Quarterly Report of LG Display Co., Ltd. for the nine-month period ended September 30, 2012. The company is a leading global manufacturer of TFT-LCD and OLED display panels. Operations are primarily conducted through facilities in Paju and Gumi, Korea, with significant overseas subsidiaries in the Americas, Europe, and Asia. The financial statements are prepared in accordance with Korean International Financial Reporting Standards (K-IFRS).
Key Financial Metrics (Nine Months Ended Sept 30, 2012)
| Metric | Value (Consolidated K-IFRS) | Unit |
|---|---|---|
| Revenue | 20,687,093 | Million Won |
| Operating Profit | 49,699 | Million Won |
| Net Loss | (83,383) | Million Won |
| Net Loss Attributable to Owners | (81,024) | Million Won |
| Basic EPS | (226) | Won |
| Net Cash from Operating Activities | 3,673,292 | Million Won |
| Net Cash Used in Investing Activities | (3,322,841) | Million Won |
| Total Assets | 25,316,520 | Million Won |
| Total Liabilities | 15,339,673 | Million Won |
| Total Equity | 9,976,847 | Million Won |
Segment Performance (LCD Business): Sales Revenue was 20,687 billion Won, with a Gross Profit of 1,899 billion Won and an Operating Profit of 50 billion Won.
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased by approximately 17% to 20.69 trillion Won compared to 17.68 trillion Won in the same period of 2011, driven by higher sales volumes and a 5% increase in average selling prices in Q3 2012.
- Profitability Turnaround: The company returned to operating profitability (49.7 billion Won) compared to an operating loss of 779.6 billion Won in the prior year period. However, a net loss of 83.4 billion Won was recorded due to significant non-operating expenses, including foreign currency losses and legal provisions, compared to a net loss of 781.6 billion Won in 2011.
- Capital Expenditures: Capital expenditures on a cash out basis were estimated at approximately 4 trillion Won for 2012, reflecting continued investment in capacity expansion (P83 and P98 lines).
- Convertible Bonds: The remaining US$66 million of convertible bonds due in 2012 were repaid in full upon maturity in April 2012.
Outlook, Risks, and Contingencies
Management Commentary: Management notes that while demand for TV panels is growing, demand for notebook and monitor panels has stagnated. The company is focusing on high-end products (IPS, 3D, touch screens) and cost reduction measures to mitigate industry-wide price declines.
Legal Contingencies (Antitrust): The company faces significant ongoing litigation regarding alleged antitrust violations in the TFT-LCD industry.
- US DOJ: Pleaded guilty in 2008 and paid a US$400 million fine.
- European Commission: Imposed a EUR 215 million fine in 2010; the company is appealing.
- Korea Fair Trade Commission: Imposed a fine of approximately 31.4 billion Won in December 2011; the company has appealed.
- Class Actions: Settlements were reached with direct and indirect purchaser classes in the US, subject to court approval. The company is defending against 36 individual "Direct Action Plaintiffs" and ongoing class actions in Canada.
Patent Litigation:
- ITRI (Taiwan): USITC issued an initial determination in October 2012 finding no infringement; final determination expected February 2013.
- Anvik Corp: Case dismissed in April 2012, but Anvik appealed to the Federal Circuit.
Risks: The company highlights risks related to foreign exchange fluctuations (sales in USD, costs in Won/JPY), declining average selling prices, and the cyclical nature of the TFT-LCD industry.
Key Facts for Investor Verification
- Antitrust Liability Exposure: Verify the status of the appeal regarding the EUR 215 million EU fine and the KRW 31.4 billion Korean fine, as well as the potential liability from the 36 pending US individual lawsuits.
- Foreign Exchange Sensitivity: Assess the impact of Won strengthening on future margins, given the company's significant exposure to USD sales and JPY/USD costs.
- Capital Intensity: Confirm the completion and utilization rates of the new P98 production line and the financial impact of the estimated 4 trillion Won capital expenditure plan for 2012.
- Customer Concentration: Note that the top ten end-brand customers accounted for 69% of sales in the first nine months of 2012.
- Dividend Policy: No cash dividend was declared for the fiscal year 2011 (meeting held March 2012), and none was declared for the period ending September 2012.