1Q'18 Earnings Release. April 26, 2018 LG Electronics

Transcription

1 1Q'18 Earnings Release April 26, 2018 LG Electronics

2 All information regarding management performance and financial results of LG Electronics (the Company ) during the 1st quarter of 2018 as contained herein has been prepared on a consolidated basis in accordance with International Financial Reporting Standards ( IFRS ). The information regarding results of 1 st quarter of 2018 has been prepared in advance, prior to being reviewed by outside auditors, solely for the convenience of investors of the Company, and is subject to change in the process of final review by external auditors. The information contained herein includes forward-looking statements in respect to future plans, prospects, and performances of the Company as well as the Company s projected sales plan for the 2 nd quarter of These forward-looking statements also refer to the Company s performance on consolidated base, as indicated. The aforementioned forward-looking statements are influenced by changes in the management environment and relative events, and by their nature, these statements refer to uncertain circumstances. Consequently, due to these uncertainties, the Company s actual future results may differ materially from those expressed or implied by such statements. Please note that as the forward-looking statements contained herein are based on the current market situation and the Company s management direction, they are subject to change according to the changes in future market environment and business strategy. The information contained herein should not be utilized for any legal purposes in regards to investors investment results. The Company hereby expressly disclaims any and all liability for any loss or damage resulting from the investors reliance on the information contained herein.

3 Table of Contents Ⅰ Ⅱ Consolidated Earnings and Outlook Performance and Outlook by Division

4 Ⅰ Consolidated Earnings and Outlook

5 Consolidated Earnings and Outlook Sales / Profits Sales / Profits (Unit : KRW tn) Performance by Division (Unit : KRW bn) Operating Income (%) 1 Sales 2.2% QoQ 10.9% 7.3% YoY 3.2% 6.3% Q Q 18.1Q 1Q 18 1Q Q 4Q'17 QoQ 1Q'18 YoY 1Q'17 Sales 16, % 15, % 14,657.2 Consolidated *1) O.I , H&A *2) Home Appliance & Air Solution HE *2) Home Entertainment MC Mobile Communications VC Vehicle Components B2B *3) Business to Business (%) 2.2% 5.1%p 7.3% 1.0%p 6.3% Sales 4, % 4, % 4,504.5 O.I (%) 1.8% 9.4%p 11.2% -0.2%p 11.4% Sales 4, % 4, % 3,835.5 O.I (%) 6.9% 7.1%p 14.0% 5.5%p 8.5% Sales 2, % 2, % 2,986.4 O.I (%) -7.4% 1.1%p -6.3% -6.3%p 0.0% Sales % % O.I (%) -5.1% 3.1%p -2.0% -0.2%p -1.8% Sales % % O.I (%) 7.1% 5.2%p 12.3% 7.1%p 5.2% *1) Including LG Innotek *2) From 1Q'18, Energy Management Solution, Energy Storage System has been restated to H&A division from Others and ID division has been restated to B2B division from HE division *3) From 1Q'18, B2B division has been newly established. ID(Information display) business has been restated to B2B from HE division and solar module business has been restated to B2B from Others

6 Consolidated Earnings and Outlook Income Analysis Operating Income vs. Net Income Difference Analysis (Unit : KRW bn) Income Trend (Unit : KRW bn) 1, Net financial income/expense Equity method loss Other non-operating income/expense Corporate income tax Operating Income 4Q'17 QoQ 1Q'18 YoY 1Q' , Net financial income/expense Gain/Loss on equity method Other non-operating income/expense Income Before Tax ,091.9 Corporate income tax Net Income Operating Income Net Income EBITDA , ,

7 Consolidated Earnings and Outlook Cash Flow Net Cash Flow *1) (Unit : KRW bn) Cash Flow (Unit : KRW bn) Effects of exchange rate changes Equity method gain/loss Working capital Depreciation Net Income Cash In Cash Out Others *2) Cash flow from investing activities Net C/F 4Q'17 1Q'18 Cash at the beginning of period 3, ,350.6 Cash flow from operating activities 1.2 1,025.7 Net income/loss Depreciation Gain/Loss on equity method investment Changes in working capital Others Cash flow from investing activities Increase in tangible assets Increase in intangible assets Cash flow from financing activities Dividend paid, etc Increase/Decrease in debt Effects of exchange rate changes on cash and cash equivalents Net changes in cash Cash at the end of period 3, ,753.1 *1) Net Cash Flow: Excluding Cash flow from financing activities *2) Others: Increase/decrease of other Assets/Liabilities 3

8 Consolidated Earnings and Outlook Leverage Ratio / Financial Position Leverage Ratio (Unit: %) Financial Position (Unit : KRW tn) 1Q 17 4Q 17 1Q 18 1Q'17 4Q'17 1Q' Assets Liabilities to Equity 167 Current Assets Cash Inventory Debt to Equity Non-Current Assets Liabilities Current Liabilities Net Debt to Equity Non-Current Liabilities Equity Debt Net Debt

9 Consolidated Earnings and Outlook 2Q 18 Outlook Business Environment Global economic recovery expected driven by stimulus plan and favorable employment outlook Continued risk from global economic uncertainty such as interest, exchange rates and trade protectionism Key Strategies Continuous development of business structure - B2C : Operate profit-oriented business - B2B : Accelerate profitable growth by strengthening business competency Sales & Profits Outlook Sales growth by mid-single digit QoQ Maintain stable profitability 5

10 Ⅱ Performance and Outlook by Division

11 Performance and Outlook by Division H&A (Home Appliance and Air Solution) Performance *1) (Unit: %, KRW tn) 1Q 18 Performance Op. Margin 11.4% 8.9% 8.6% 1.8% 11.2% Sales : Achieved 4.9 tril. Won, up 9% YoY - Domestic : Maintained strong sales thanks to solid sales of major products such as Whisen ThinQ air conditioner, TWINWash washing machine and new growth products such as dryer, styler and air purifier - Overseas : Continued YoY growth (in USD) driven by sales in Europe, Asia and Latin America Sales Profitability : Despite unfavorable factors such as won appreciation and raw material price increase, maintained strong profitability from sales growth driven by premium products and cost management 2Q 18 Outlook 17.1Q 1Q 17 2Q Q 3Q Q 17.4Q 4Q Q 1Q 18 Key Products Market : In spite of market volatility from exchange rates fluctuation and trade protectionism, continuous market growth is expected from peak season of air conditioners and demand growth of premium products LGE : Maintain stable profitability by maximizing peak season sales and cost structure improvement activities InstaView DID TWINWash Whisen ThinkQ A/C 6 *1) From 1Q'18, Energy Management Solution, Energy Storage System has been restated to H&A division from Others

12 Performance and Outlook by Division HE (Home Entertainment) Performance *1) (Unit: %, KRW tn) 1Q 18 Performance Op. Margin 8.5% 7.7% 9.6% 6.9% 14.0% Sales : Down QoQ due to weak seasonality, but sales went up 7% YoY - OLED and UHD TV led YoY growth Sales Profitability : Improved YoY thanks to continued sales of premium products and material cost decline 2Q 18 Outlook 17.1Q 1Q 17 2Q Q 3Q Q 17.4Q 4Q Q 1Q 18 Key Products Market : TV demand expected to increase YoY from sports events and rapid growth of premium TV market LG SIGNATURE OLED TV W LG Super Ultra UHD TV (Nano Cell TV) LGE : Respond to additional demand from sport events in a timely manner, continue sales growth by strengthening sales activities for new products, maintain strong profit structure from solid sales of OLED and UHD TV and strengthening cost competitiveness 7 *1) From 1Q'18, ID division has been restated to B2B division from HE division

13 Performance and Outlook by Division MC (Mobile Communications) Performance (Unit: %, KRW tn) 1Q 18 Performance Op. Margin Sales : Declined QoQ due to revised smartphone launching strategy 0.0% -5.4% -7.4% -6.3% - Smartphone shipment recorded 11.4mn units (-18% QoQ, -23% YoY) -14.2% Sales Profitability : In spite of sales decline, losses narrowed by improving cost structure through quality costs and modular design activities 2Q 18 Outlook 17.1Q 1Q 17 2Q Q 3Q Q 4Q Q 18.1Q 1Q 18 Key Products Market : Intense market share competition to continue from stagnant smartphone market and aggressive market expansion of Chinese companies LGE : Increase sales by launching premium flagship model and mid to high-end mass-tier smartphones and improve profitability by managing product mix Q6 V30 X4 + 8

14 Performance and Outlook by Division VC (Vehicle Components) Performance (Unit: %, KRW tn) 1Q 18 Performance Op. Margin Sales : Up 3% QoQ, down 1% YoY due to sluggish vehicle sales of major clients -1.8% -2.2% -3.7% -5.1% -2.0% Sales Profitability : Marginal losses continued from short-term stagnant sales growth and investments in new electric components 2Q 18 Outlook 17.1Q 1Q 17 2Q Q 3Q Q 17.4Q 4Q Q 1Q 18 Key Products AV/AVN Telematics CID Infotainment Devices Traction Motor Inverter Battery Pack xev Solution ADAS Camera LCD Cluster Automotive Lamp Safety & Convenience Devices Market : LGE : Based on the connectivity technology trend, adoption of electric device in vehicles is accelerating. At the same time, securing the stability of electric components is becoming more important Market wise, electric vehicle market is expected to expand mainly in North America and Europe Focus on successful launch of new projects which will drive sales growth in 2H 9

15 Performance and Outlook by Division B2B (Business to Business) Performance *1) (Unit: %, KRW tn) 1Q 18 Performance Op. Margin 5.2% 4.2% 8.5% 7.1% 12.3% Sales : Up 24% YoY from sales growth of large screen signage and high performance solar modules Sales Profitability : Improved YoY thanks to sales growth of high-margin signage and solar module and cost improvements 2Q 18 Outlook 17.1Q 1Q 17 2Q Q 17.3Q 3Q Q 4Q Q 1Q 18 Key Products Market : Signage market is growing by the convergence of IT and digital contents and growth of large UHD & LED signage is to accelerate. Solar modules are expected to become more price competitive as a result of U.S. safeguard measures. Information Display Solar Module LGE : Signage sales to grow from OLED and premium signage sales growth, but intense competition is expected in solar modules market *1) From 1Q'18, B2B division has been newly established. ID(Information display) business has been restated to B2B from HE division and solar module business has been restated to B2B from Others 9

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17 Appendix Organizational Structure of LG Electronics LG Electronics Home Appliance Home Mobile Vehicle & Air Solution Entertainment Communications Components Home Appliance & Air Solution Home Entertainment Mobile Communications Vehicle Components B2B (Business to Business) * * Newly established 10

18 Appendix Summarized Financial Statements (Consolidated) Income Statement (Unit: KRW bn, %) Total 1Q 2Q 3Q 4Q Total 1Q Sales 55, % 14, % 14, % 15, % 16, % 61, % 15, % Cost of goods sold 41, % 10, % 10, % 11, % 13, % 46, % 11, % Gross profit 13, % 3, % 3, % 3, % 3, % 14, % 3, % Selling & admin expense 12, % 2, % 3, % 3, % 3, % 12, % 2, % Operating income (Loss) 1, % % % % % 2, % 1, % Financial income (Expense) % % % % % % % Gains (loss) on equity method investment % % % % % % % Other non operating income (Loss) % % % % % % % Net income before tax % 1, % % % % 2, % % Corporate Income Tax % % % % % % % Net income % % % % % 1, % % Controlled shares , Noncontrolled shares *) Since the information regarding results of 1Q'18 has been prepared in advance, it is subject to change in the process of final review by external auditors 11

19 Appendix Summarized Financial Statements (Consolidated) Statements of Financial Position (Unit: KRW bn) Q 1Q 2Q 3Q 4Q 1Q Assets 37, , , , , ,222.0 Current Assets 16, , , , , ,072.9 Cash and cash equivalents 3, , , , , ,753.1 Accounts receivable 7, , , , , ,144.8 Inventory 5, , , , , ,872.7 Other 1, , , , , ,302.3 Non-current Assets 20, , , , , ,149.1 Investment 5, , , , , ,571.0 PP&E 11, , , , , ,000.1 Intangible assets 1, , , , , ,920.7 Other 2, , , , , ,657.3 Liabilities 24, , , , , ,766.0 Accounts payable 6, , , , , ,243.0 Debt 8, , , , , ,622.2 Other 9, , , , , ,900.8 Equity 13, , , , , ,456.0 *) Since the information regarding results of 1Q'18 has been prepared in advance, it is subject to change in the process of final review by external auditors 12

20 Appendix Sales / Profits by Division (Consolidated) (Unit: KRW bn) '16 Total 1Q'17 2Q 17 3Q'17 4Q'17 '17 Total 1Q'18 QoQ YoY H&A Sales 16, , , , , , , % 9% (Home Appliance & Air Solution) Op. Income 1, , (%) 7.3% 11.4% 8.9% 8.6% 1.8% 7.8% 11.2% MC Sales 15, , , , , , , % 7% (Mobile Communications) Op. Income , (%) 6.2% 8.5% 7.7% 9.6% 6.9% 8.1% 14.0% HE Sales 11, , , , , , , % -28% (Home Entertainment) Op. Income -1, (%) -10.8% 0.0% -5.4% -14.2% -7.4% -6.6% -6.3% VC Sales 2, , % -1% (Vehicle Components) Op. Income (%) -2.9% -1.8% -2.2% -3.7% -5.1% -3.2% -2.0% B2B Sales 2, , % 24% (Business to Business) Op. Income (%) 11.2% 5.2% 4.2% 8.5% 7.1% 6.4% 12.3% Others Sales 2, , % 66% Op. Income LGE Consolidated Excluding LG Innotek(1) LG Innotek(2) LGE-LG Innotek Inter-company Transaction (3) Sales 50, , , , , , , % 3% Op. Income 1, , ,099.5 (%) 2.4% 6.4% 4.8% 3.5% 1.6% 4.0% 8.0% Sales 5, , , , , , , % 5% Op. Income Sales 1, , % -4% Op. Income Sales 55, , , , , , , % 3% LGE Consolidated (1+2-3) Op. Income 1, , ,107.8 (%) 2.4% 6.3% 4.6% 3.4% 2.2% 4.0% 7.3% *1) Since the information regarding results of 1Q'18 has been prepared in advance, it is subject to change in the process of final review by external auditors *2) From 1Q'18, Energy Management Solution, Energy Storage System has been restated to H&A division from Others and ID division has been restated to B2B division from HE division 13