LG.Philips LCD Reports Third Quarter 2007 Results
SEOUL, Korea – LG.Philips LCD [NYSE: LPL, KRX: 034220], one of the world’s leading TFT-LCD manufacturers, today reported unaudited earnings results based on consolidated Korean GAAP for the three-month period ended September 30, 2007. Amounts in Korean Won (KRW) are translated into US dollars (USD) at the noon buying rate in effect on September 28, 2007, which was KRW 914 per US dollar.
• Sales in the third quarter of 2007 increased by 18% to KRW 3,953 billion (USD 4,325 million) from sales of KRW 3,355 billion (USD 3,671 million) in the second quarter of 2007 and increased 43% compared to KRW 2,773 billion (USD 3,034 million) in the third quarter of 2006.
• Operating profit in the third quarter of 2007 was KRW 693 billion (USD 758 million) compared to an operating profit of KRW 150 billion (USD 164 million) in the second quarter of 2007, and an operating loss of KRW 382 billion (USD 418 million) in the third quarter of 2006.
• EBITDA in the third quarter of 2007 was KRW 1,376 billion (USD 1,505 million), an increase of 62% from KRW 850 billion (USD 930 million) in the second quarter of 2007 and a year-over-year increase of 366% from KRW 295 billion (USD 323 million) in the third quarter of 2006.
• Net income in the third quarter of 2007 was a profit of KRW 524 billion (USD 573 million) compared to a profit of KRW 228 billion (USD 249 million) in the second quarter of 2007 and a loss of KRW 321 billion (USD 351 million) in the third quarter of 2006.
Young Soo Kwon, CEO of LG.Philips LCD, said, “We are pleased with our financial performance this quarter, underscored by better than expected profit levels. These strong results reflect our focus on value based management including our continued diligence on reducing costs, maintaining a disciplined CAPEX strategy, developing marketing initiatives focused on our customer base, and managing appropriate inventory levels given both the current and projected market demand. Additionally, better than anticipated cost savings this quarter of 9 percent in terms of USD came as a result of our product development effort and effectively managing the supply chain. We are well on our way to achieving this year’s guided cost reduction of approximately 30 percent.”
Mr. Kwon continued, “Today, the Board of Directors approved investment in a Gen 8 facility with additional CAPEX of around KRW 2.5 trillion, targeting ramp-up in the first half of 2009. We believe this timing is in line with expected market demand of large-sized LCD TVs.”
“In conclusion, our current strategic decisions produced constructive results in the third quarter and attest that we are progressing in the right direction and well positioned to retain our role as a disciplined leader in this dynamic industry.”
Third Quarter Financial Review
Revenue and Cost
Revenue for the three-month period ended September 30, 2007, increased by 43% to KRW 3,953 billion (USD 4,325 million) from KRW 2,773 billion (USD 3,034 million) for the corresponding period of 2006. TFT-LCD panels for TVs, monitors, notebook PCs and other applications accounted for 48%, 25%, 22% and 5%, respectively, on a revenue basis in the third quarter of 2007.
Overall, the Company shipped a total of 3.1 million square meters of net display area in the third quarter of 2007, an increase of 11% quarter-on-quarter. The average selling price per square meter of net display area shipped was USD 1,364, which was an increase of approximately 7% compared to the average of the second quarter of 2007. The ending average selling price per square meter was USD 1,369, an increase of approximately 4% compared to the end of the second quarter of 2007.
For the third quarter of 2007, the cost of goods sold per square meter of net display area shipped decreased 9 % to KRW 1.0 million (USD 1,071) from the second quarter of 2007.
Liquidity
Cash and cash equivalents of LG.Philips LCD were KRW 1,656 billion (USD 1,812 million) as of September 30, 2007. Total debt was KRW 4,432 billion (USD 4,849 million), and the net debt-to-equity ratio was 37% as of September 30, 2007, compared to 49% as of June 30, 2007.
Capital Spending
Capital expenditures in the third quarter of 2007 were KRW 328 billion (USD 359 million) compared to KRW 908 billion (USD 993 million) in the third quarter of 2006, and were largely for P7.
Capacity
Total production input capacity on an area basis increased approximately 17 % sequentially in the third quarter and was largely due to increase of production, mainly in P7.
Outlook
The following expectations are based on information as of October 9, 2007. The Company does not expect to update its expectations until 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.
“We are encouraged by the progress we have made over the last 5 quarters, as we have fundamentally shifted the company’s perspective from being volume driven to becoming value-based. This focus will continue into the quarters ahead. Our overriding goal is to generate greater shareholder value and our management team is committed to making the right strategic decisions to that effect.” said Ron Wirahadiraksa, CFO of LG.Philips LCD.
“Looking ahead, we expect shipments in the fourth quarter of 2007 to increase by a mid single digit percentage with a low single digit percentage declining average and ending ASP. We expect shipments in the TV segment to increase by a high single digit percentage with a mid single digit percentage declining average and ending ASP. In the IT segment, we anticipate shipments to decrease by a low single digit percentage with an average ASP flat and a mid single digit percentage declining ending ASP. Our COGS reduction per square meter is expected to be a low single digit percentage in the fourth quarter. As a result, we expect our EBITDA margin for the fourth quarter of 2007 to be in the mid thirties percentage range. We plan to maintain our capital expenditures in 2007 to approximately KRW 1 trillion. In addition, we expect our CAPEX for 2008 to be around KRW 3 trillion, which we feel is the right approach to capital spending given market demand.” Mr. Wirahadiraksa concluded.
Earnings Conference and Conference Call
LG.Philips LCD will hold a Korean language earnings conference on October 9, 2007, at
4:30 p.m. Korea Standard Time on the 4th floor, in the Grand Conference room of the Korea Investment & Securities Building, 27-1 Yeouido-dong, Yeongdeungpo-gu, Seoul, Korea. An English language conference call will follow at 9:00 p.m. Korea Standard Time, 8:00 a.m. EDT and 12:00 p.m. GMT. The call-in number is +82 (0)31-810-3001 for both callers in Korea and callers outside of Korea. The confirmation number is 3777. Corresponding slides will be available at the Investor Relations section of the LG.Philips LCD web site: http://www.lgphilips-lcd.com.
Investors can listen to the conference call via the Internet at http://www.lgphilips-lcd.com. To listen to the live call, please go to the Investor Relations section of the web site at least 15 minutes prior to the call to register and install any necessary audio software.
For those who are unable to participate in the call, a replay will be available for 30 days after the call. The call-in number is 031-810-3100 for callers in Korea and +82-31-810-3100 for callers outside of Korea. The confirmation number for the replay is 110120#.
About LG.Philips LCD
LG.Philips LCD Co., Ltd. [NYSE: LPL, KRX: 034220] is a leading manufacturer and supplier of thin-film transistor liquid crystal display (TFT-LCD) panels. The Company manufactures TFT-LCD panels in a wide range of sizes and specifications for use in TVs, monitors, notebook PCs, and various applications. LG.Philips LCD currently operates seven fabrication facilities and four back-end assembly sites in Korea, China and Poland. The Company has a total of 23,000 employees operating in ten countries around the world. Please visit http://www.lgphilips-lcd.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.
• Sales in the third quarter of 2007 increased by 18% to KRW 3,953 billion (USD 4,325 million) from sales of KRW 3,355 billion (USD 3,671 million) in the second quarter of 2007 and increased 43% compared to KRW 2,773 billion (USD 3,034 million) in the third quarter of 2006.
• Operating profit in the third quarter of 2007 was KRW 693 billion (USD 758 million) compared to an operating profit of KRW 150 billion (USD 164 million) in the second quarter of 2007, and an operating loss of KRW 382 billion (USD 418 million) in the third quarter of 2006.
• EBITDA in the third quarter of 2007 was KRW 1,376 billion (USD 1,505 million), an increase of 62% from KRW 850 billion (USD 930 million) in the second quarter of 2007 and a year-over-year increase of 366% from KRW 295 billion (USD 323 million) in the third quarter of 2006.
• Net income in the third quarter of 2007 was a profit of KRW 524 billion (USD 573 million) compared to a profit of KRW 228 billion (USD 249 million) in the second quarter of 2007 and a loss of KRW 321 billion (USD 351 million) in the third quarter of 2006.
Young Soo Kwon, CEO of LG.Philips LCD, said, “We are pleased with our financial performance this quarter, underscored by better than expected profit levels. These strong results reflect our focus on value based management including our continued diligence on reducing costs, maintaining a disciplined CAPEX strategy, developing marketing initiatives focused on our customer base, and managing appropriate inventory levels given both the current and projected market demand. Additionally, better than anticipated cost savings this quarter of 9 percent in terms of USD came as a result of our product development effort and effectively managing the supply chain. We are well on our way to achieving this year’s guided cost reduction of approximately 30 percent.”
Mr. Kwon continued, “Today, the Board of Directors approved investment in a Gen 8 facility with additional CAPEX of around KRW 2.5 trillion, targeting ramp-up in the first half of 2009. We believe this timing is in line with expected market demand of large-sized LCD TVs.”
“In conclusion, our current strategic decisions produced constructive results in the third quarter and attest that we are progressing in the right direction and well positioned to retain our role as a disciplined leader in this dynamic industry.”
Third Quarter Financial Review
Revenue and Cost
Revenue for the three-month period ended September 30, 2007, increased by 43% to KRW 3,953 billion (USD 4,325 million) from KRW 2,773 billion (USD 3,034 million) for the corresponding period of 2006. TFT-LCD panels for TVs, monitors, notebook PCs and other applications accounted for 48%, 25%, 22% and 5%, respectively, on a revenue basis in the third quarter of 2007.
Overall, the Company shipped a total of 3.1 million square meters of net display area in the third quarter of 2007, an increase of 11% quarter-on-quarter. The average selling price per square meter of net display area shipped was USD 1,364, which was an increase of approximately 7% compared to the average of the second quarter of 2007. The ending average selling price per square meter was USD 1,369, an increase of approximately 4% compared to the end of the second quarter of 2007.
For the third quarter of 2007, the cost of goods sold per square meter of net display area shipped decreased 9 % to KRW 1.0 million (USD 1,071) from the second quarter of 2007.
Liquidity
Cash and cash equivalents of LG.Philips LCD were KRW 1,656 billion (USD 1,812 million) as of September 30, 2007. Total debt was KRW 4,432 billion (USD 4,849 million), and the net debt-to-equity ratio was 37% as of September 30, 2007, compared to 49% as of June 30, 2007.
Capital Spending
Capital expenditures in the third quarter of 2007 were KRW 328 billion (USD 359 million) compared to KRW 908 billion (USD 993 million) in the third quarter of 2006, and were largely for P7.
Capacity
Total production input capacity on an area basis increased approximately 17 % sequentially in the third quarter and was largely due to increase of production, mainly in P7.
Outlook
The following expectations are based on information as of October 9, 2007. The Company does not expect to update its expectations until 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.
“We are encouraged by the progress we have made over the last 5 quarters, as we have fundamentally shifted the company’s perspective from being volume driven to becoming value-based. This focus will continue into the quarters ahead. Our overriding goal is to generate greater shareholder value and our management team is committed to making the right strategic decisions to that effect.” said Ron Wirahadiraksa, CFO of LG.Philips LCD.
“Looking ahead, we expect shipments in the fourth quarter of 2007 to increase by a mid single digit percentage with a low single digit percentage declining average and ending ASP. We expect shipments in the TV segment to increase by a high single digit percentage with a mid single digit percentage declining average and ending ASP. In the IT segment, we anticipate shipments to decrease by a low single digit percentage with an average ASP flat and a mid single digit percentage declining ending ASP. Our COGS reduction per square meter is expected to be a low single digit percentage in the fourth quarter. As a result, we expect our EBITDA margin for the fourth quarter of 2007 to be in the mid thirties percentage range. We plan to maintain our capital expenditures in 2007 to approximately KRW 1 trillion. In addition, we expect our CAPEX for 2008 to be around KRW 3 trillion, which we feel is the right approach to capital spending given market demand.” Mr. Wirahadiraksa concluded.
Earnings Conference and Conference Call
LG.Philips LCD will hold a Korean language earnings conference on October 9, 2007, at
4:30 p.m. Korea Standard Time on the 4th floor, in the Grand Conference room of the Korea Investment & Securities Building, 27-1 Yeouido-dong, Yeongdeungpo-gu, Seoul, Korea. An English language conference call will follow at 9:00 p.m. Korea Standard Time, 8:00 a.m. EDT and 12:00 p.m. GMT. The call-in number is +82 (0)31-810-3001 for both callers in Korea and callers outside of Korea. The confirmation number is 3777. Corresponding slides will be available at the Investor Relations section of the LG.Philips LCD web site: http://www.lgphilips-lcd.com.
Investors can listen to the conference call via the Internet at http://www.lgphilips-lcd.com. To listen to the live call, please go to the Investor Relations section of the web site at least 15 minutes prior to the call to register and install any necessary audio software.
For those who are unable to participate in the call, a replay will be available for 30 days after the call. The call-in number is 031-810-3100 for callers in Korea and +82-31-810-3100 for callers outside of Korea. The confirmation number for the replay is 110120#.
About LG.Philips LCD
LG.Philips LCD Co., Ltd. [NYSE: LPL, KRX: 034220] is a leading manufacturer and supplier of thin-film transistor liquid crystal display (TFT-LCD) panels. The Company manufactures TFT-LCD panels in a wide range of sizes and specifications for use in TVs, monitors, notebook PCs, and various applications. LG.Philips LCD currently operates seven fabrication facilities and four back-end assembly sites in Korea, China and Poland. The Company has a total of 23,000 employees operating in ten countries around the world. Please visit http://www.lgphilips-lcd.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.
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