Business performance also passed the bottom due to payment of 1.3 trillion won in paid-in capital increase
(Seoul = Yonhap Infomax) Reporter Kim Hak-seong = LG Display[034220]brought its debt ratio back below 300% in three quarters.
This was thanks to the inflow of paid-in capital increase proceeds of approximately 1.3 trillion won last month.
Additionally, operating performance is gradually improving, raising expectations for improved financial structure.
LG Display Paju Business Site
[출처: LG디스플레이]
According to LG Display on the 26th, LG Display’s debt ratio as of the end of the first quarter was 279%, a decrease of 29 percentage points (p) compared to 308% in the previous quarter.
LG Display’s debt ratio was 158% at the end of 2021, but soared to 322% at the end of the third quarter of last year, seven quarters later. This is because a net loss of over 5.8 trillion won accumulated during this period.
LG Display recorded a long-awaited surplus in the fourth quarter of last year, halting the upward trend in its debt ratio, and lowered its debt ratio for two consecutive quarters by paying approximately 1.3 trillion won in paid-in capital increase last month.
The net debt ratio (145%) in the first quarter also returned to below 150% for the first time in three quarters.
LG Display recorded an operating loss of KRW 469.4 billion in the first quarter, turning into a loss again compared to the previous quarter, but reduced the loss by less than half compared to the same period last year to eliminate seasonality. This was a decline that exceeded market expectations.
The EBITDA (operating profit before amortization) profit margin, which represents cash generation power, was 15.4% in the first quarter and exceeded 15% for two consecutive quarters.
The three domestic credit rating companies presented LG Display’s EBITDA profit margin of less than 10% as a factor in considering downgrade of its credit rating, and it is assessed that the decline in credit rating that has continued for at least five years has stopped.
LG Display’s credit rating was downgraded by three levels from ‘AA’ in 2018 to ‘A’ last year.
LG Display is also seeking to improve its financial structure through asset sales.
Currently, we are pursuing the sale of the liquid crystal display (LCD) plant in Guangzhou, China, and on the 24th, LG U+[032640]decided to sell real estate located in Paju, Gyeonggi-do for 105.3 billion won.
Kim Seong-hyeon, Chief Financial Officer (CFO) of LG Display, said in a conference call announcing the first quarter earnings the previous day, “Net borrowings (about 13 trillion won) are naturally a burdensome level,” and added, “We need to improve asset soundness or convert things that are not considered strategic assets into other types of assets.” “We are pushing forward with it,” he said.
He also announced that he aims for a turnaround by expanding the proportion of high-end products centered on organic light-emitting diodes (OLED) in the second half of the year.
CFO Kim explained, “The most effective financial measure is for the business to generate profits,” and added, “It seems like results are starting to come in little by little. The results may be better than you expect.”
He suggested that due to the increase in shipments of mid- to large-sized products in the second quarter, the shipment area will rise to the mid-20% level compared to the previous quarter, and the selling price per area will fall by low single digits.
KB Securities researchers Kim Dong-won and Yoo Woo-hyung analyzed, “Performance variables in the second half of the year are the recovery of demand for sets such as TVs and PCs, and the small and medium-sized OLED panel business, which has the potential for price competition due to expansion of supply lines.”
LG Display 1st quarter 2024 summary financial position
[출처: LG디스플레이]
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This article was published at 08:13 on the Infomax financial information terminal.
Tags: Display debt ratio falls #300.. financial structure continue improve IBCompany Text article
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