LG Display Co., Ltd. Form 6-K Summary
Business Context and Reporting Period
This Form 6-K reports the unaudited consolidated financial results for LG Display Co., Ltd. for the second quarter of 2018 (ended June 30, 2018), filed on July 25, 2018. The company is a global leader in display technologies, including TFT-LCD and OLED panels for TVs, mobile devices, and IT products.
Key Financial Metrics (Q2 2018)
| Metric | Q2 2018 (KRW B) | Q1 2018 (KRW B) | Q2 2017 (KRW B) |
|---|---|---|---|
| Revenues | 5,611 | 5,675 | 6,629 |
| Operating Income | -228 | -98 | 804 |
| Income Before Tax | -340 | -96 | 832 |
| Net Income | -301 | -49 | 737 |
| EBITDA | 681 | 812 | 1,583 |
Liquidity and Debt (as of June 30, 2018):
- Liability-to-Equity Ratio: 116%
- Current Ratio: 99%
- Net Debt-to-Equity Ratio: 30%
Material Changes vs. Prior Periods
- Revenue: Decreased 1% quarter-over-quarter (QoQ) and 15% year-over-year (YoY).
- Profitability: The company swung from an operating profit of KRW 804 billion in Q2 2017 to an operating loss of KRW 228 billion in Q2 2018. Net income turned into a net loss of KRW 301 billion.
- Cause: Management attributed the decline to a steep drop in panel prices and lower demand driven by conservative purchasing strategies from set makers.
- Debt: Liability-to-equity and net debt-to-equity ratios increased compared to the previous quarter due to borrowings for a strategic shift toward an OLED-focused business structure.
Guidance, Outlook, and Management Commentary
- Q3 Outlook: Panel area shipments are expected to increase by a mid-single digit percentage due to favorable seasonality. Panel prices are anticipated to turn positive, though this depends on supply and demand per size.
- Turnaround: LG Display expects to achieve a turnaround to profit in the OLED TV sector in Q3 2018.
- Investment Strategy: The company plans to invest KRW 3 trillion less than originally planned by 2020 by adjusting investment timing and amounts. It will accelerate the shift to OLED, including a final decision to invest in a Gen 10.5 OLED line in Paju, Korea, and mass production at a Gen 8.5 line in Guangzhou, China, in the latter half of 2019.
- Strategic Focus: Emphasis on differentiated LCD features (narrow bezel, IPS borderless, oxide technology) and high-value-added products like large-size TV panels and commercial displays.
Investor Verification Checklist
- Verify the sustainability of the projected Q3 2018 profit turnaround in the OLED TV sector.
- Confirm the impact of the KRW 3 trillion investment reduction on long-term capacity and market share.
- Monitor the trend of panel prices and the effectiveness of the conservative purchasing strategies by set makers.
- Review the progress of the Gen 10.5 OLED production line in Paju and the Gen 8.5 line in Guangzhou.
- Assess the company's ability to manage increased debt ratios while executing its strategic shift to OLED.