LG Display Co., Ltd. (LPL) Q4 2010 Earnings Call January 21, 2011 8:00 AM ET Executives Anthony Moon – Vice President, Investor Relations J.S. Park – Head, TV Marketing Department Seong Lee – Vice President, IT Marketing Analysts Brian White – Ticonderoga Securities Andrew Abrams – Avian Securities Richard Klotz – Moore Capital Olga Levinzon – Barclays Capital Jeffrey Toder – RBS WonJae Lee – Credit Suisse Ben Lu – Seligman Investments Securities Presentation Anthony Moon
Previous Statements by LPL
» LG Display Co Ltd. Q4 2009 Earnings Conference Call
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We -- in the fourth quarter, we registered an operating loss of 387 billion won as we recognized 238 billion in expenses from the EU fine in the fourth quarter. Without recognizing the fine our operating losses would have been a much lower 150 billion won.Now despite the losses recorded in the fourth quarter for the full year sales grew 20%, excuse me, 27% year-on-year to 25.5 trillion won and operating profit reached 1.3 trillion won up 30% year-on-year. For the full year this is achievable as we increased the proportion of our higher value add products such as AH-IPS panels and LED TVs throughout the year, plus the introduction of the super high resolution display for smartphones. Moving on to slide four, as of much, excuse me, as of the industry in 2010, we had 3.1 trillion won in cash and cash equivalents. Inventory declined to 2.2 trillion won, which is 11% fall from the previous quarter. Our current inventory situation I would describe as being very normal, somewhere between two to three weeks. While our debt levels have increased a bit, our net debt to equity is still a very manageable 14%. Moving onto slide five our cash flow. Cash flow from operating activities resulted in cash inflow of 1.7 trillion won. Cash flow from investing activities resulted in outflow of 2.1 trillion won, resulting in net cash outflow of 416 billion won. Now, note that our CapEx for the full year of 2010 amounted to 4.9 trillion won. Moving onto slide number six. Our panel shipments increased 10% while our overall ASP fell 10.7%. As I had mentioned a bit earlier, prices did fall slightly more than what we had expected with TV price – with TV panel prices falling a bit more than IT panels. Moving onto slide seven. If you look at our mix, you’ll see that the TV represented 56% of our total revenues followed by monitors at 19%, notebook PCs at 17%, and applications at 8%. So fall in TV portion is more due to the ASP decline than actual decline in upward products. The larger portion of notebook PC is the reflection of the rise in tablet PC panels for us.
Applications, which is mostly mobile displays or handphone displays remained relatively high at 8%, as demand for the super high resolution panels from smartphone remained strong.Moving on to slide eight and looking at our capacity. Our input capacity remained relatively unchanged in the fourth quarter as we had very little – no new capacity coming on in the fourth quarter. Though a small incremental increase is from our P82 which as you know began to ramp earlier last year. Now, looking into this quarter, 2011 first quarter, we are expecting our shipment to decline in the high single-digit range sequentially, due mostly to the seasonality of our industry. We expect TV panel prices to decline a bit more but at a much decelerated space compared to fourth quarter. On the IT panel side, we actually believe panel prices will remain very, very stable in the first quarter. In the – within the whole full chain in the panels we see very little excess inventory throughout the full chain. Our set manufacturers continue to reduce their inventory of last year’s models and start to introduce new models later this quarter. We do expect demand to improve in the later parts of this quarter. We expect our CapEx in 2011 to have around 5 trillion won on a cash out basis that includes our investment in our third, excuse me, our fourth Gen 8 in our new P9 facility and there is some amount of AMOLED CapEx included as well. Read the rest of this transcript for free on seekingalpha.com