LG Display Co., Ltd. - Q1 2021 Financial Summary
Business Context and Reporting Period
This Form 6-K filing covers the consolidated quarterly report for LG Display Co., Ltd. for the period from January 1, 2021, to March 31, 2021. The company operates as a single reporting segment focused on the research, development, manufacture, and sale of display panels utilizing TFT-LCD and OLED technologies. Major production facilities are located in Paju and Gumi (Korea) and Guangzhou (China).
Key Financial Metrics (Consolidated K-IFRS)
| Metric | Q1 2021 | Q1 2020 | Full Year 2020 |
|---|---|---|---|
| Revenue | W 6,883 billion | W 4,724 billion | W 24,230 billion |
| Gross Profit | W 1,231 billion | W 278 billion | W 2,643 billion |
| Operating Profit | W 523 billion | (W 362 billion) | (W 29 billion) |
| Net Profit (Consolidated) | W 266 billion | (W 199 billion) | (W 71 billion) |
| Net Profit (Attributable to Owners) | W 228 billion | (W 199 billion) | (W 89 billion) |
| Earnings Per Share (Basic) | W 637 | (W 556) | (W 250) |
| Total Assets | W 36,398 billion | W 35,575 billion (Dec 31, 2019) | W 35,072 billion (Dec 31, 2020) |
| Total Liabilities | W 23,158 billion | W 23,086 billion (Dec 31, 2019) | W 22,335 billion (Dec 31, 2020) |
| Net Cash from Operating Activities | W 962 billion | W 185 billion | N/A |
Material Changes vs. Prior Period
- Profitability Turnaround: The company returned to profitability in Q1 2021, reporting an operating profit of W 523 billion compared to an operating loss of W 362 billion in Q1 2020. This marks a significant recovery from the full-year 2020 operating loss of W 29 billion.
- Revenue Growth: Revenue increased by approximately 46% year-over-year (from W 4,724 billion to W 6,883 billion), driven by strong demand in the IT and Television sectors.
- Product Mix Shift: While the average selling price per square meter decreased by 7% compared to Q4 2020 due to reduced mobile plastic OLED shipments, revenue growth was sustained by volume increases in IT products (39.5% of revenue) and Televisions (31.2% of revenue).
- Raw Material Costs: Costs for key raw materials increased significantly. Electrolytic galvanized iron (for backlights) rose 19.0%, copper (for PCBs) rose 18.1%, and polymethyl methacrylate rose 7.0% compared to Q4 2020.
Guidance, Outlook, and Risks
- Investment Plan: Management expects total capital expenditures for 2021 to be in the mid- to high-W3 trillion range, funded within EBITDA. This is an increase from the mid-W2 trillion spent in 2020.
- Strategic Focus: The company is transitioning its business focus toward OLED products to secure profitability, specifically expanding 8.5th and 10.5th generation OLED capacity for large-sized TVs. In the IT sector, the focus is on premium products using IPS and Oxide technologies.
- Market Risks: The industry remains highly cyclical. Risks include supply-demand imbalances affecting average selling prices, intense competition from Chinese manufacturers in the TFT-LCD sector, and foreign exchange fluctuations (sales are primarily in USD, while costs are in Won, USD, and JPY).
- Legal Proceedings: The company is a defendant in antitrust lawsuits in the UK, Israel, and US, though management does not believe these will have a material effect. Patent infringement lawsuits filed by Solas OLED Ltd. were settled and dismissed in early 2021.
- Safety Incidents: A chemical leakage incident occurred in January 2021 at the Paju plant, causing bodily harm. Management is implementing enhanced safety measures.
Key Facts for Investor Verification
- Customer Concentration: Two customers ("A" and "B") each accounted for more than 10% of sales revenue. The top ten customers comprised 86% of total sales in Q1 2021.
- Convertible Bonds: The company has outstanding unsecured foreign convertible bonds (No. 3) with an issue amount of approximately W 813 billion (USD 687.8 million), maturing in August 2024.
- Dividend Policy: No dividends were paid during the last three fiscal years (2019, 2020, and Q1 2021).
- Related Party Transactions: Significant transactions exist with LG Electronics Inc. (largest shareholder, 37.9% ownership) and its subsidiaries, as well as LG Group affiliates like LG Chem and Silicon Works.
- Accounting Standards: Financial data is presented under Korean International Financial Reporting Standards (K-IFRS), which may differ from US GAAP.