LG Display Co., Ltd. - Form 6-K Summary (Q1-Q3 2020)
Business Context and Reporting Period
This Form 6-K reports the consolidated financial results for LG Display Co., Ltd. for the nine-month period ended September 30, 2020. The company is a global leader in the research, development, and manufacture of display panels, primarily utilizing TFT-LCD and OLED technologies. Operations are conducted through facilities in Korea (Paju, Gumi) and China (Guangzhou, Nanjing, Yantai), with sales subsidiaries globally. The company operates as a single reporting segment.
Key Financial Metrics (Consolidated K-IFRS)
| Metric | 9 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2019 |
|---|---|---|
| Revenue | W 16,769 billion | W 23,476 billion |
| Gross Profit | W 1,252 billion | W 1,868 billion |
| Operating Loss | (W 715 billion) | (W 1,359 billion) |
| Net Loss | (W 692 billion) | (W 2,872 billion) |
| Net Loss Attributable to Owners | (W 658 billion) | (W 2,830 billion) |
| EPS (Basic & Diluted) | (W 1,838) | (W 7,908) |
| Total Assets | W 35,497 billion | W 35,575 billion |
| Total Liabilities | W 23,323 billion | W 23,086 billion |
| Net Cash from Operating Activities | W 1,188 billion | W 1,243 billion |
| Net Cash Used in Investing Activities | (W 2,065 billion) | (W 5,704 billion) |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased by approximately 28.6% year-over-year to W 16.77 trillion, driven by a significant drop in sales of television panels (down to W 4.58 trillion from W 6.18 trillion) and mobile panels.
- Improved Profitability: Despite the revenue decline, the operating loss narrowed significantly from W 1.36 trillion in the prior year to W 715 billion. The net loss attributable to owners improved from W 2.83 trillion to W 658 billion.
- Product Mix Shift: Sales of IT products (notebooks/tablets) increased to W 4.23 trillion (up from W 3.75 trillion) due to increased demand from remote work and online learning trends during the pandemic.
- Capital Expenditure Reduction: Capital expenditures dropped significantly to approximately W 2.17 trillion for the nine-month period, compared to W 5.92 trillion in the prior year, as major OLED investments were completed in previous years.
- Market Share: Worldwide market share for large-sized panels (9 inches or larger) decreased to 21.9% in 2020 Q1-Q3 from 27.2% in the same period of 2019.
Guidance, Outlook, and Risks
- Strategic Focus: Management is transitioning the business to center around OLED, focusing on premium products like "Cinematic Sound" and "Wallpaper" OLED panels. The company is expanding 8.5th generation OLED capacity and investing in 10.5th generation production.
- Investment Plan: The company expects total capital expenditures for the full year 2020 to be slightly less than W 3 trillion, investing within its EBITDA.
- Legal Contingencies:
- Antitrust Litigation: The company is a defendant in follow-on damages claims in the UK, Israel, and US regarding alleged anticompetitive behavior. The company believes these will not have a material effect on financial conditions.
- Patent Infringement: Solas OLED Ltd. filed lawsuits in the US, Germany, and China. A German court ruled against LG Display in November 2020; the company plans to appeal. A nullity action is ongoing in Germany.
- Market Risks: The industry is highly cyclical and sensitive to supply/demand imbalances. The company faces risks from currency fluctuations (sales in USD, costs in Won/JPY) and raw material price volatility.
Key Facts for Investor Verification
- Credit Ratings: Domestic corporate bond ratings were downgraded to A+ by major Korean agencies (NICE, KIS, Korea Ratings) in early 2020, down from AA/AA- in 2019.
- Convertible Bonds: The company has outstanding Unsecured Foreign Convertible Bonds No. 3 (USD 687.8 million) maturing in August 2024, convertible into approximately 41 million shares.
- Customer Concentration: The top ten customers accounted for 84% of total sales revenue in the first three quarters of 2020, up from 79% in the prior year.
- Environmental Compliance: The company has faced various fines for environmental and safety violations (waste disposal, air quality, safety training) totaling several million Won, though these are not considered material to the overall financial position.
- Dividends: No cash or stock dividends were paid during the 2020 Q1-Q3 period, consistent with the prior two years due to accumulated losses.