LG Display sees Q4 profits tumble, bets big on OLED

LG Display has just announced its fourth quarter and yearly accounting details, revealing a tough fourth quarter but another overall profitable year for the industry leading display manufacturer.

Between October and December 2015, LG Display generated an operating profit of 61 billion won ($50.6 million). This equals a quarter-on-quarter decrease of 82 percent and a year-on-year fall of 90 percent, when the company posted a 626 billion won profit in Q4 2014. However, revenue generated in Q4 2015 was down only 10 percent compared with 2014. Annually, LG Display increased its operating profit by 20 percent, from 1,357 billion won up to 1,626 billion won.

LG suggests that falling global panel prices, particularly as a result of cheaper Chinese competitors, and a generally poor economic outlook had directly impacted on its business. Furthermore, LG Display is in the process of making a number of expensive acquisitions and investments as its moves part of its business into the production of new OLED displays, which the company is anticipating high demand for in the coming years. According to a recent filling, the company is investing a further USD$380 million into a new production facility.

After accounting for all of the company’s expenditure, LG Display posted a net loss of 14 billion won in the quarter, compared with an income of 389 billion won a year earlier. However, annual net income came in at KRW 1,023 billion, a year-on-year increase of 12 percent from KRW 917 billion.

As we know, LG Display provides panels to the company’s smartphone division, therefore one profits directly from the other. LCD mobile panels accounted for 32 percent of sales last year. Although LG did not particularly specify, the lower Display profits in Q3 and Q4 are likely closely linked to the company’s lower smartphone sales in the tail end of the year, when compared with 2014.

Although LG’s smartphone division may have posted a loss for the year, some of this is offset by the revenue that it created for LG Display, so the overall picture still looks quite healthy for LG.

Looking ahead, LG Display is not expecting demand to recover quickly in the first quarter of the year, but still plans to press ahead with investments into new OLED production facilities.

[press]

LG Display Reports Fourth Quarter 2015 Results

SEOUL, Korea (Jan. 27, 2016) – LG Display reported today unaudited earnings results based on consolidated K-IFRS (International Financial Reporting Standards) for the three-month period ending December 31, 2015.

Revenue in the fourth quarter of 2015 increased by 5% to KRW 7,496 billion from KRW 7,158 billion in the third quarter of 2015 but decreased by 10% from KRW 8,342 billion in the fourth quarter of 2014.

Operating profit in the fourth quarter of 2015 recorded KRW 61 billion, a quarter-on-quarter decrease of 82% from an operating profit of KRW 333 billion in the third quarter of 2015, and a year-on-year decrease of 90% from the operating profit of KRW 626 billion in the fourth quarter of 2014.

EBITDA in the fourth quarter of 2015 was KRW 882 billion, compared with EBITDA of KRW 1,178 billion in the third quarter of 2015 and with EBITDA of KRW 1,532 billion in the fourth quarter of 2014.

Net loss in the fourth quarter of 2015 amounted to KRW 14 billion, compared with net income of KRW 198 billion in the third quarter of 2015, and with net income of KRW 389 billion in the fourth quarter of 2014.

LG Display announced its fifteenth straight quarterly operating profit at KRW 61 billion, and surpassed an annual operating profit of KRW 1,000 billion for three consecutive years based on its product differentiation and technology leadership amid falling panel prices due to global economic recession and the expanded supply by Chinese panel makers.

The company recorded annual revenue of KRW 28,384 billion, a year-on-year increase of 7% from KRW 26,456 billion in 2014, and annual operating profit of KRW 1,626 billion, a year-on-year increase of 20% from KRW 1,357 billion in 2014. EBITDA for 2015 was KRW 5,001 billion, and annual net income was KRW 1,023 billion, a year-on-year increase of 12% from KRW 917 billion.

Despite the significant panel price decline resulting from global economic recession and the expanded supply by Chinese panel makers, LG Display was able to continue its fifteenth straight quarterly operating profit through expansion of differentiated products such as Ultra HD TV panels, Advanced In-cell Touch (AIT) panels, and In-Plane Switching(IPS) panels.

The Board of Directors meeting decided on a dividend of KRW 500 per common share, in keeping with the previous year’s dividend. The decision is subject to the approval of the forthcoming Annual General Meeting of Shareholders in March.

LG Display will strengthen its market leadership by providing customers differentiated value with continuous investment for OLED market expansion and competitiveness enhancement.

TFT-LCD panels for TVs accounted for 34% of revenue in the fourth quarter of 2015, mobile device panels for 32%, tablet PCs and notebook PCs 19%, and monitors 15%.

With 78% in the liability-to-equity ratio, as of December 31, 2015, and decreased inventory asset to KRW 2,352 billion in the fourth quarter, compared with KRW 2,876 billion in the previous quarter, the financial structure of the company remains stable.

Mr. Don Kim, CFO of LG Display, said “Given the continuing economic uncertainty, we are not in a favorable situation to expect demand to recover in the first quarter of 2016. However, the company aims to sustain market credibility and create value focusing on differentiated technology competitiveness. We will continue preparing for the future of OLED and invest in differentiation including in new OLED facilities.”

About LG Display
LG Display Co., Ltd. [NYSE: LPL, KRX: 034220] is the world’s leading innovator of display technologies including thin-film transistor liquid crystal display (TFT-LCD) panels, OLEDs, and flexible displays. The company manufactures and provides TFT-LCD panels in a broad range of sizes and specifications for use in TVs, monitors, notebook PCs, and various other applications including mobile devices and tablets. LG Display also produces OLED light panels in a variety of shapes and sizes. LG Display currently operates fabrication facilities in Korea and China, and back-end assembly facilities in Korea, China and Poland. The company has a total of 50,000 employees operating worldwide. Please visit www.lgdisplay.com <http://www.lgdisplay.com> for more information.

Forward-Looking Statement Disclaimer
This press release contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Additional information as to factors that may cause actual results to differ materially from our forward-looking statements can be found in our filings with the United States Securities and Exchange Commission.

[/press]