LG Display Co., Ltd. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on February 28, 2018, submits the audited consolidated financial statements for LG Display Co., Ltd. and its subsidiaries for the fiscal years ended December 31, 2017, and December 31, 2016. The company is a global manufacturer of Thin Film Transistor Liquid Crystal Display (TFT-LCD) and Organic Light Emitting Diode (OLED) panels and modules. Operations are located in South Korea, China, Poland, and Vietnam. The financial statements were audited by Samjong Accounting Corporation (KPMG) and received an unqualified opinion.
Key Financial Metrics (Fiscal Year 2017)
| Metric | 2017 (Won) | 2016 (Won) |
|---|---|---|
| Revenue | 27,790,216,000,000 | 26,504,074,000,000 |
| Operating Income | 2,461,618,000,000 | 1,311,416,000,000 |
| Net Income | 1,937,052,000,000 | 931,508,000,000 |
| Operating Margin | 8.86% | 4.95% |
| Net Margin | 6.97% | 3.51% |
| Total Assets | 29,159,687,000,000 | 24,884,336,000,000 |
| Total Liabilities | 14,178,177,000,000 | 11,421,948,000,000 |
| Shareholders' Equity | 14,981,510,000,000 | 13,462,388,000,000 |
| Net Cash from Operating Activities | 6,764,201,000,000 | 3,640,906,000,000 |
| Net Cash Used in Investing Activities | (6,481,072,000,000) | (3,189,182,000,000) |
| Cash and Cash Equivalents (Year End) | 2,602,560,000,000 | 1,558,696,000,000 |
Material Changes vs. Prior Period
- Profitability Surge: Net income more than doubled, increasing by approximately 108% from W931.5 billion in 2016 to W1.94 trillion in 2017. Operating income grew by 88%.
- Revenue Growth: Total revenue increased by 4.9% year-over-year, driven by sales of goods which rose to W27.75 trillion.
- Capital Expenditure: Cash used in investing activities increased significantly (103%) to W6.48 trillion, primarily due to acquisitions of property, plant, and equipment totaling W6.59 trillion, reflecting continued expansion of manufacturing capacity.
- Balance Sheet Expansion: Total assets grew by 17.2% to W29.16 trillion, with Property, Plant, and Equipment (PP&E) increasing by 34.7% to W16.20 trillion.
- Debt Levels: Total borrowings (including bonds) increased to W5.60 trillion from W4.78 trillion. However, the net borrowings to equity ratio remained stable at 15%.
Guidance, Outlook, and Risks
Management Commentary & Outlook: The filing does not contain forward-looking guidance or specific management commentary regarding future quarters. The focus is on the historical performance of FY2017.
Accounting Changes: The company plans to adopt K-IFRS No. 1109 (Financial Instruments) and K-IFRS No. 1115 (Revenue from Contracts with Customers) effective January 1, 2018. Management expects no significant impact from K-IFRS 1109, but K-IFRS 1115 is expected to increase refund liabilities and assets for the right to recover returned goods by approximately W9.8 billion.
Risks and Contingencies:
- Legal Proceedings: Several patent infringement cases (e.g., with Delaware Display Group and Surpass Tech Innovation) were settled or dismissed in 2017. An anti-trust litigation with Argos Limited was settled in principle in December 2017.
- Foreign Exchange: The company is exposed to currency risk, primarily from USD, CNY, and JPY. A 5% weakening of the Won against the USD would increase profit or loss by approximately W91.2 billion.
- Customer Concentration: The top ten end-brand customers accounted for 81% of total sales in 2017.
Key Facts for Investor Verification
- Dividend Declaration: The Board of Directors determined a dividend of W500 per share (totaling W178.9 billion) in 2017, which had not been paid as of the reporting date.
- Major Customer Dependence: Verify the stability of relationships with the top ten customers, who represent the vast majority of revenue.
- Capital Intensity: Confirm the utilization rates of the significant new capacity added in 2017 (W6.59 trillion in PP&E additions) to ensure it supports future revenue growth.
- Related Party Transactions: Significant transactions exist with LG Electronics Inc. and its subsidiaries, including sales of W3.73 trillion and purchases of W637 billion in 2017.
- Defined Benefit Obligations: The company has a net defined benefit liability of W95.4 billion, with a weighted average remaining maturity of 14.0 years.