LG.Philips LCD Reports Fourth Quarter 2006 Results.SEOUL, South Korea -- LG.Philips LCD (NYSE NYSE See: New York Stock Exchange :LPL LPL - List Programming Language. LISP-like language with ALGOL-like syntax, for IBM 360. "LPL - LISP Programming Language", F.W. Blair et al, RC 3062, IBM TJWRC, Sep 1970. ) (KRX KRX Korea Exchange (stock market) KRX Korean Recycler's Exchange :034220), one of the world's leading TFT-LCD TFT-LCD Thin Film Transistor - Liquid Crystal Display manufacturers, today reported unaudited earnings results based on consolidated Korean GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). for the three-month period ended December 31, 2006. Amounts in Korean Won (KRW KRW In currencies, this is the abbreviation for the Korean Won. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) are translated into US dollars (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) at the noon buying rate in effect on December 29, 2006, which was KRW 930.00 per US dollar. * Sales in the fourth quarter of 2006 increased by 11% to KRW 3,065 billion (USD 3,296 million) from sales of KRW 2,773 billion (USD 2,982 million) in the third quarter of 2006 and increased 3% compared to KRW 2,963 billion (USD 3,186 million) in the fourth quarter of 2005. * Operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the fourth quarter of 2006 was KRW 177 billion (USD 190 million) compared to an operating loss of KRW 382 billion (USD 411 million) in the third quarter of 2006, and an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of KRW 334 billion (USD 359 million) in the fourth quarter of 2005. * EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become in the fourth quarter of 2006 was KRW 559 billion (USD 601 million), an increase of 89% from KRW 295 billion (USD 317 million) in the third quarter of 2006 and a year-over-year decline of 32% from KRW 824 billion (USD 886 million) in the fourth quarter of 2005. * Net income in the fourth quarter of 2006 was a loss of KRW 174 billion (USD 187 million) compared to a loss of KRW 321 billion (USD 345 million) in the third quarter of 2006 and a profit of KRW 328 billion (USD 353 million) in the fourth quarter of 2005. Ron Wirahadiraksa, CFO See Chief Financial Officer. of LG.Philips LCD, said, "We are encouraged by our performance this quarter and the results of the enhanced cost reduction initiatives we are implementing. During the fourth quarter, we were able to reduce our COGS per square meter in KRW by 10% sequentially. In addition, we maintained finished goods inventory levels at slightly under three weeks at the end of the quarter. Further, the increasing number of long-term supply agreements we have secured, reflects our continued focus on closer customer collaboration as we head into a challenging market environment in 2007." "Responding to the needs of our customers and a rapidly evolving global business environment remains a key focus of LG.Philips LCD," Mr. Wirahadiraksa continued. "We believe our strategy is strong and that the new leadership team, announced in late December, will further enhance the Company's global standing and business capabilities." Fourth Quarter Financial Review Revenue and Cost Revenue in the three-month period ended December 31, 2006, increased by 3% to KRW 3,065 billion (USD 3,296 million) from KRW 2,963 billion (USD 3,186 million) in the corresponding period of 2005. TFT-LCD panels for TVs, desktop monitors, notebook computers and other applications accounted for 48%, 27%, 21% and 4%, respectively, on a revenue basis in the fourth quarter of 2006. Overall, the Company shipped a total of 2.3 million square meters of net display area in the fourth quarter of 2006, a 14% increase quarter-on-quarter, with an average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. per square meter of USD 1,414. This represents a decrease in the average selling price per square meter of net display area of approximately 3% compared to the end of the third quarter of 2006 and an average decrease of 1% from the third quarter of 2006. The total cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold increased 2% sequentially to KRW 3,090 billion (USD 3,323 million), and increased 26% year-over-year driven by shipment growth. The cost of goods sold per square meter of net display area shipped was KRW 1.4 million (USD 1,460) for the fourth quarter of 2006, down 10% from the third quarter of 2006. Liquidity As of December 31, 2006, LG.Philips LCD had KRW 954 billion (USD 1,026 million) of cash and cash equivalents. Total debt was KRW 4,121 billion (USD 4,431 million), and the net debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. was 46% as of December 31, 2006, compared to 57% as of September 30, 2006. Capital Spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. Capital expenditures in the fourth quarter of 2006 were KRW 324 billion (USD 348 million) compared to KRW 1,396 billion (USD 1,501 million) in the fourth quarter of 2005, and were primarily invested in Gen 5.5, the Poland module plant, the enhancement of production efficiency, and the maintenance of existing facilities. Utilization and Capacity Total input capacity on an area basis increased approximately 17% sequentially in the fourth quarter, mainly attributable to the ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of P7, which currently averages 78,000 input sheets per month. Outlook The following expectations are based on current information as of January 16, 2007. The Company does not expect to update its expectations until next quarter's earnings announcement. However, the Company may update its full business outlook, or any portion thereof, at any time for any reason. "For the first quarter of 2007, we anticipate a mid-single digit decrease percentage in total area shipments sequentially, where TV decreases by a high-teens and IT increases by a mid-single digit percentage," commented Mr. Wirahadiraksa. "We anticipate the ASP per square meter at the end of the first quarter of 2007 as well as the average ASP during the quarter to decline by a low-teens percentage, which is the same for TV and IT." Mr. Wirahadiraksa continued, "Our COGS reduction per square meter is expected to be a mid-single digit percentage in the first quarter. Accordingly, our EBITDA margin for the first quarter of 2007 is expected to be a mid-teens percentage. Looking forward to 2007, we anticipate continued progress in our cost reduction efforts and expect that these strategies will reduce costs by 25 to 30 percent." "Our CAPEX guidance for 2007 remains at approximately KRW 1 trillion. Our 2007 CAPEX will be utilized for future production facilities, production efficiency enhancement and existing facility maintenance, thereby providing us with more operational flexibility," Mr. Wirahadiraksa concluded. Earnings Conference and Conference Call LG.Philips LCD will hold a Korean language earnings conference on January 16, 2007, at 4:30 p.m. Korea Standard Time Korea Standard Time (KST, Korean: 한반도 표준시. In South Korea: 대한민국 표준시.) is the standard time zone in North and South Korea and is 9 hours ahead of UTC (UTC+9): i.e. on the 1st floor, in the International Conference Room of the Korea Exchange Building (KRX). An English language conference call will follow at 10:00 p.m. Korea Standard Time, 8:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy and 1:00 p.m. GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 . 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 Investor relations The process by which the corporation communicates with its investors. 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 76999#. 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 liquid crystal display (LCD) Optoelectronic device used in displays for watches, calculators, notebook computers, and other electronic devices. Current passed through specific portions of the liquid crystal solution causes the crystals to align, blocking the passage of light. (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 facilities in Korea, China and Poland. In addition, LG.Philips LCD has sales and representative offices in ten countries and has approximately 21,000 employees globally. 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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