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LG Display posts impressive Q4 profits while operating costs continue to increase

LG Display has just posted an impressive increase in revenue for Q4 2014. LG's P-OLED and OLED displays are on the rise, which means operating costs are increasing as well.
By
January 28, 2015
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LG Display has just posted their earning results for Q4 2014. While interest in LG’s display technology has seemingly been growing drastically, the company’s operating costs may be dragging it down.

Overall revenue for Q4 totaled 8,342 billion won, which is a 27% increase from Q3 2014 and an 18% increase from Q4 2013. Operating profits for Q4 2014 totaled 626 billion won, which is a 32% increase from Q3 of 2014 and a year-on-year increase of 144% from 257 billion won in in Q4 2013. LG explains that these increases are largely due to more shipments of larger size panels overall, and an increase in small/medium displays through the peak season through the end of the year. LG also mentions that larger, more inexpensive displays have a lot to do with the profit.

Additionally, LG Display’s net income increased by 10% to 389 billion won in Q4 from Q3. This is also a massive 448% increase from Q4 2013. LG Display’s year-over-year net income has increased 119% from 2013. Annual revenue decreased by 1 trillion won from 2013 to 2014. TFT-LCD panels for TVs accounted for 36% of revenue in Q4 2014, mobile device panels for 23%, tablet panels for 19%, computer monitors for 14% and notebook PCs for 8%.

With more interest in LG’s display technology growing worldwide, operating costs will obviously increase. LG has displayed leadership in the market with P-OLED and OLED panels, and the company is confident that they will continue to see profits throughout 2015 and will work to keep operating costs to a minimum.

[press]LG DISPLAY REPORTS FOURTH QUARTER 2014 RESULTS SEOUL, Korea (January 28, 2015) – LG Display reported today unaudited earnings results based on consolidated K-IFRS (International Financial Reporting Standards) for the three-month period ending December31, 2014.

Revenue in the fourth quarter of 2014 increased by 27% to KRW 8,342 billion from KRW 6,547 billion in the third quarter of 2014 and increased by 18% from KRW 7,079 billion in the fourth quarter of 2013.

Operating profit in the fourth quarter of 2014 recorded KRW 626 billion, a quarter-on-quarter increase of 32% from an operating profit of KRW 474 billion and a year-on-year increase of 144% from the operating profit of KRW 257 billion in the fourth quarter of 2013.

EBITDA in the fourth quarter of 2014 was KRW 1,532 billion, compared with EBITDA of KRW 1,295 billion in the third quarter of 2014 and with EBITDA of KRW 1,124 billion in the fourth quarter of 2013.

Net income in the fourth quarter of 2014 amounted to KRW 389 billion, a quarter-on-quarter increase of 10% from KRW 354 billion in the third quarter of 2014 and a year-on-year increase of 448% from KRW 71 billion in the fourth quarter of 2013.

LG Display posted its eleventh straight quarterly operating profit at KRW 626 billion and quarterly revenue exceeding KRW 8 trillion resulting from increased shipments reflecting a continual trend towards larger size panels and new product launches in the small and medium display segment through the peak season at the year-end. Favorable pricing condition, particularly in large-sized panels due to the above trend, also contributed to the improved results. LG Display recorded an annual net income of KRW 917 billion in 2014, a year-on-year increase of 119% from the net income of KRW 419 billion in 2013. Annual revenue slightly decreased to KRW 26.456 trillion compared with revenue of KRW 27.033 trillion in 2013. The company expanded its portion of high value-added panels such as those for large-sized, high resolution TVs and mobile devices based on an efficient operational production strategy to proactively meet market demands. Accordingly, despite the decreased annual revenue due to the changes in the business structure towards increased Cell business1 , profitability improved significantly.

In providing a return to the shareholders, LG Display declared a dividend of KRW 500 per common share at the Board of Directors meeting held on the 27th of January. The decision will be finalized after approval at the forthcoming Annual General Meeting of Shareholders.TFT-LCD panels for TVs accounted for 36% of revenue in the fourth quarter of 2014, mobile device panels for 23%, tablet PCs 19%, monitors 14%, and notebook PCs 8%. With 95% in the liability to equity ratio, 122% in the current ratio, and 16% in the net debt to equity ratio as of December 31, 2014, the financial structure of the company remains stable.

Semi-finished panels without backlight module Outlook The following forecast is based on information as of January 28, 2015. The Company does not expect to update its estimates until the next quarter’s earnings announcement. However, the Company reserves the right to update its full business outlook, or any portion thereof, at any time and for any reason. “Shipments in the first quarter are expected to decrease by a mid-single digit percentage, less influenced by seasonality compared with other years, due to steady market demand and the company’s efficient operational production strategy, while overall panel prices are expected to remain stable although they may vary by product segment,” said Don Kim, CFO of LG Display. “LG Display expects a quarter-onquarter decrease in profits given that the first quarter is an off season, but we’re committed to continually enhance our profit competitiveness through technology differentiation and cost reductions.”[/press]