LG Display Co., Ltd. - SEC Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on March 8, 2022, submits the audited consolidated financial statements for LG Display Co., Ltd. and its subsidiaries for the fiscal years ended December 31, 2021, and December 31, 2020. The Group manufactures and sells Thin Film Transistor Liquid Crystal Display (TFT-LCD) and Organic Light Emitting Diode (OLED) panels and modules. Operations are located in South Korea (Gumi, Paju), China, and Vietnam. The financial statements were audited by Samjong Accounting Corporation (KPMG) and received an unqualified opinion.
Key Financial Metrics (FY 2021 vs. FY 2020)
| Metric (KRW Millions) | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | 29,878,043 | 24,261,561 |
| Operating Income | 2,230,608 | (36,464) |
| Net Income | 1,333,544 | (76,147) |
| Operating Margin | 7.5% | (0.1%) |
| Net Margin | 4.5% | (0.3%) |
| Total Assets | 38,154,515 | 35,066,012 |
| Total Liabilities | 23,392,014 | 22,334,584 |
| Shareholders' Equity | 14,762,501 | 12,731,428 |
| Net Cash from Operating Activities | 5,753,446 | 2,278,784 |
| Net Cash Used in Investing Activities | (4,263,080) | (2,311,152) |
| Cash and Cash Equivalents (Year End) | 3,541,597 | 4,218,099 |
Material Changes and Performance Drivers
- Turnaround to Profitability: The Group returned to profitability in 2021, reporting a net income of KRW 1.33 trillion compared to a net loss of KRW 76 billion in 2020. Operating income improved from a loss of KRW 36 billion to a profit of KRW 2.23 trillion.
- Revenue Growth: Revenue increased by approximately 23% year-over-year, driven by strong demand across TV, IT, and Mobile segments.
- Cost Management: While cost of sales increased to KRW 24.57 trillion (from KRW 21.63 trillion), the gross profit margin expanded significantly to 17.8% from 10.9% in the prior year.
- Investment Activity: Capital expenditures remained high, with net cash used in investing activities increasing to KRW 4.26 trillion, primarily due to acquisitions of property, plant, and equipment (KRW 3.14 trillion) and intangible assets (KRW 636 billion).
- Accounting Policy Change: The Group early adopted amendments to K-IFRS No. 1016 regarding proceeds before intended use for property, plant, and equipment. This resulted in the restatement of comparative 2020 figures, slightly reducing reported revenue and operating income for that period.
Outlook, Risks, and Contingencies
- Dividend Proposal: Management proposed a dividend of KRW 650 per share (totaling KRW 232.58 billion) to be submitted for shareholder approval. This amount has not yet been paid.
- Impairment Testing: Goodwill of KRW 48.3 billion is allocated to the Display Cash Generating Unit (CGU). The recoverable amount exceeded the carrying amount by KRW 2.64 trillion. However, the valuation is sensitive to discount rates and terminal growth rates; a 1.67% increase in the discount rate or a 1.82% decrease in the terminal growth rate would result in the recoverable amount equaling the carrying amount.
- Deferred Tax Assets: The Group holds KRW 2.31 trillion in deferred tax assets. Recognition depends on the generation of future taxable income. There are KRW 182.6 billion in unused tax credit carryforwards for which no deferred tax asset was recognized.
- Legal Proceedings: The Group is involved in anti-trust "follow-on" damages claims in the EU and various other lawsuits. While Solas OLED patent litigation was settled and dismissed in 2021, the Group cannot reliably estimate the timing or amount of outflows for other pending proceedings.
- Financial Risk: The Group manages currency risk (exposure to USD, CNY, JPY) and interest rate risk through derivatives. A 5% weakening of the Won against the USD would increase profit or loss by KRW 2.3 billion, while a 5% weakening against the CNY would increase it by KRW 172 million.
Key Facts for Investor Verification
- Customer Concentration: The top ten end-brand customers accounted for 86% of total sales in 2021. Sales to two specific customers (Company A and Company B) totaled KRW 17.9 trillion.
- Geographic Exposure: China remains the largest revenue market (KRW 19.9 trillion), followed by Asia excluding China (KRW 3.3 trillion) and the United States (KRW 3.3 trillion).
- Debt Structure: Total borrowings (including bonds) were KRW 12.66 trillion. The net borrowings to equity ratio improved to 57% from 77% in the prior year.
- Convertible Bonds: The Group has outstanding unsecured foreign currency denominated convertible bonds with a principal amount of USD 687.8 million, maturing in August 2024. These are classified as financial liabilities at fair value through profit or loss.
- Related Party Transactions: Significant sales were made to LG Electronics Inc. and its subsidiaries, totaling KRW 4.92 trillion in 2021.