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Originally, our panel shipment for first quarter was expected to be similar to the fourth quarter with channel inventory restocking demand and new model lineup by set makers as well as launch of our differentiated products. However, some delay in the schedule of differentiated product and new model development resulted in 4% shipment decrease.Operating loss continued while panel price remained stable at a slight decline all in the quarter. Cost reduction recorded low single-digits. There is improvement effort to increase competitiveness in first quarter affected the results negatively due to some delay of new model shipments. As most of the issues have been already resolved, we expect these efforts to bear fruit in second quarter leading to the meaningful improvement in the results. Looking at second quarter, the demand is expected to be stronger, while the inventory level industry-wide remains low. Order from our customers is expected to be strong with new model lineup in preparation for the sports events. As the portion of differentiated products including FPR 3D panels for smart devices continues to expand in an improving market situation, we expect to turn profit in second quarter. However, as the global economic scale remains uncertain, there are some uncertainties in the market, which could potentially impact the panel shipments. Looking at the overall Display industry, we feel it is indisputable that LCD has entered maturity and slow growth stage. LG Display is carefully carrying out thorough analysis in the strategic direction and investment plans with the following three points under consideration; number one, the optimization of the existing LCD business; number two, taking leadership in the larger OLED TV market; and number three, finding future growth engines. China investment which is to be carried out in the near future will also be a part of LCD business optimization by expanding access to the China market and obtaining cost competitiveness. We will tell you more about these long-term strategic direction and investment plans in the next quarter earnings.
Now moving on to our financial results, on page seven – page three, revenue in the first quarter was KRW6.6 trillion down 6% quarter-on-quarter. The demand was strong compared to traditional seasonality, however, delay in the differentiated products and new model development schedule resulted in manufacturing capacity decline. This resulted in 4% shipment decline compared to the previous quarter.After panel prices dropped slightly in the all the months, it remained stable throughout the quarter. Operating loss increased to KRW178 billion and operating margin to minus 3%, while EBITDA margin remained stable at 13%. Net income was minus KRW129 billion. Moving on to slide four looking at our financial position and ratios. Cash and cash equivalents rose by KRW60 billion to KRW2.4 trillion. Inventory was maintained at its highest level at KRW2.2 trillion. Debt level rose slightly, recording a net debt to equity ratio of 29%. Moving on to slide five, looking at our cash flow, cash at the beginning of the quarter was KRW2.3 trillion. Cash flow from operating activities resulted in cash inflow of KRW656 billion. Cash flow from investing activities resulted in an outflow of KRW1.3 trillion. And cash flow from financing activities resulted in an inflow of KRW677 billion. As a result, the net change in cash was inflow of KRW60 billion. Moving on to our shipment and ASP on slide six. Looking at our shipments, it decreased by 4% quarter-on-quarter, recording 8.1 million square meters. This is due to the temporary capacity allocation for the development of differentiated products and new developments. ASP based on LCD module price remained flat at a slight decline all in the quarter. And it recorded $669 in first quarter, a 2% quarter-on-quarter decrease. Moving onto our product mix on slide seven. In first quarter, TV product mix is 47%, Monitor 21%, Notebook 15%, Tablet 5%, Mobile 12%. New tablet PC shipments in the first quarters suffered a temporarily delay in production, which reduced the revenue portion in first quarter. However, as the normal shipping is to begin in the second quarter, the revenue percentage is expected to rise back to the previous level. Read the rest of this transcript for free on seekingalpha.com