Business Context and Reporting Period
Company: LG Display Co., Ltd.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter 2009 (ended June 30, 2009)
Filing Date: July 16, 2009
Accounting Basis: Unaudited consolidated Korean GAAP (US GAAP figures to be posted later).
Key Financial Metrics
| Item (KRW Billion) | Q2 2009 | Q1 2009 | Q2 2008 |
|---|---|---|---|
| Revenues | 4,891 | 3,666 | 4,211 |
| Operating Income | 218 | -412 | 889 |
| Ordinary Income | 350 | -372 | 930 |
| Net Income | 302 | -255 | 759 |
| EBITDA | 938 | 144 | 1,587 |
Liquidity and Balance Sheet:
- Cash and cash equivalents: KRW 2,678 billion (as of June 30, 2009).
- Liability to Equity ratio: 99%.
- Inventory days: Below two weeks.
Operational Metrics:
- Total display area shipped: 5.01 million square meters (up 33% QoQ).
- Average utilization rate: Almost 100%.
- Average selling price (ASP): USD 739 per square meter (up 11% QoQ).
- Cost of goods sold (COGS): Decreased 5% QoQ (per square meter).
Material Changes vs. Prior Periods
- Revenue Growth: Revenues increased 33.4% quarter-over-quarter (QoQ) and 16.1% year-over-year (YoY), driven by higher shipment volumes and improved ASPs.
- Profitability Turnaround: The company swung from a Q1 2009 operating loss of KRW 412 billion to a Q2 2009 operating profit of KRW 218 billion. Net income similarly turned from a loss of KRW 255 billion to a profit of KRW 302 billion.
- Year-Over-Year Decline: Despite the QoQ recovery, Q2 2009 operating income and net income remain significantly lower than Q2 2008 levels (down 75.5% and 60.2% respectively), reflecting the broader market downturn in 2008-2009.
- EBITDA: EBITDA surged to KRW 938 billion from KRW 144 billion in Q1, though it remains below the KRW 1,587 billion recorded in Q2 2008.
Guidance, Outlook, and Management Commentary
Management Commentary: CEO Young Soo Kwon attributed the return to profitability and record quarterly sales to the timely launch of new production lines and customized marketing activities. The company emphasized maximizing customer value through distinguished products and technology.
Outlook for Q3 2009:
- Shipments: Total display area shipment is expected to increase by a "mid-teens percentage."
- Pricing: Average selling price per square meter is expected to climb gradually.
- Capital Expenditure: Full-year 2009 CAPEX is set at approximately KRW 3.0 to 3.5 trillion, including the P8 extension investment approved by the Board.
Risks and Contingencies: The filing includes a standard forward-looking statement disclaimer, noting that actual results may differ materially due to inherent risks and uncertainties. The company reserves the right to update its outlook at any time.
Key Facts for Investor Verification
- Profitability Sustainability: Verify if the Q2 operating margin (approx. 4.5%) can be sustained given the significant YoY decline in absolute profit levels compared to 2008.
- US GAAP Reconciliation: Confirm the final US GAAP figures once posted, as the current filing relies on Korean GAAP which may differ in treatment of certain items.
- CAPEX Execution: Monitor the execution of the KRW 3-3.5 trillion CAPEX plan, specifically the P8 extension, and its impact on future cash flow and debt levels.
- Price vs. Volume Mix: Assess the durability of the 11% QoQ ASP increase against potential market saturation or competitive pricing pressures in Q3.
- Debt Structure: Review the detailed debt composition given the 99% Liability to Equity ratio to understand refinancing risks.