4Q'18 Earnings Release. January 31, 2019 LG Electronics

Transcription

1 4Q'18 Earnings Release January 31, 2019 LG Electronics

2 All information regarding management performance and financial results of LG Electronics (the Company ) during the 4 th 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 4 th quarter of 2018 has been prepared in advance, prior to being audited by outside auditors, solely for the convenience of investors of the Company, and is subject to change in the process of final audit 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 year 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 (%) 4.9% 0.5% 2.2% 3Q 18 QoQ 4Q 18 YoY 4Q 17 Sales 15, % 15, % 16,963.6 Consolidated *1) O.I (%) 4.9% -4.4%p 0.5% -1.7%p 2.2% QoQ 2.2% YoY 7.0% H&A *2) Home Appliance & Air Solution HE *2) Home Entertainment Sales 4, % 4, % 4,189.5 O.I (%) 8.4% -6.0%p 2.4% 0.6%p 1.8% Sales 3, % 4, % 4,868.0 O.I (%) 8.8% -4.2%p 4.6% -2.3%p 6.9% MC Mobile Communications Sales 2, % 1, % 2,923.0 O.I (%) -7.2% -11.7%p -18.9% -11.5%p -7.4% Sales VC *3) Vehicle Components Sales 1, % 1, % O.I (%) -3.6% 1.6%p -2.0% 3.1%p -5.1% B2B *4) Business to Business Sales % % O.I (%) 6.1% -3.6%p 2.5% -4.6%p 7.1% 1 3Q 18 4Q 18 4Q 17 *1) LG Innotek is included, and from 3Q'18 ZKW which was acquired in August is included *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 3Q'18, ZKW which was acquired in August is included *4) From 1Q'18, B2B division has been newly established. ID(Information Display) business has been restated to B2B from HE division and solar panel business has been restated to B2B from Others

6 Consolidated Earnings and Outlook Income Trend / Cash Flow Income Trend (Unit : KRW bn) Cash Flow (Unit : KRW bn) Operating Income 3Q'18 QoQ 4Q'18 YoY 4Q' Net financial income/expense Gain/Loss on equity method Other non-operating income/expense Income Before Tax Corporate income tax Net Income EBITDA 1, Q'18 4Q'18 Cash at the beginning of period 4, ,538.3 Cash flow from operating activities 1, ,356.6 Net income/loss Depreciation Gain/Loss on equity method investment Cash flow from investing activities *1) -1, 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 4, ,270.4 Net C/F *1) The amount paid for acquisition of ZKW is included in 3Q 18 2

7 Consolidated Earnings and Outlook Leverage Ratio / Financial Position Leverage Ratio (Unit: %) Financial Position (Unit : KRW tn) 4Q 17 3Q 18 4Q 18 4Q'17 3Q'18 4Q'18 Liabilities to Equity Assets Current Assets Cash Debt to Equity Inventory Non-Current Assets Liabilities Current Liabilities Net Debt to Equity Non-Current Liabilities Equity Debt Net Debt

8 Consolidated Earnings and Outlook `19 Outlook Business Environment (Y2019) Global economy continues to slow down Intensifying competition among industries to take initiative Key Strategies Profitable growth driven strategy to strengthen market dominance Allocate resources into strategic and new businesses to accelerate future growth Sales & Profits Outlook (Y2019,1Q 19) Maintain growth in sales and generate solid profits in 2019 Anticipate consolidated sales to increase and operating profit to significantly improve QoQ 4

9 Ⅱ Performance and Outlook by Division

10 Performance and Outlook by Division H&A (Home Appliance and Air Solution) Performance *1) (Unit: %, KRW tn) 4Q 18 Performance Op. Margin 1.8% 11.2% 8.7% 8.4% 2.4% Sales : Even though sales from emerging markets declined due to rising currency risk in LATAM region and geopolitical risk in MEA region such as Iran sanctions, grew 3.3% YoY to 4.3 tril. Won, thanks to steady sales growth in Korea, Europe, and Asia Sales Profitability : Improved profitability YoY supported by expansion of premium product sales in domestic market and continuous cost improvement 4Q 17 1Q 18 2Q 18 3Q 18 Key Products 4Q 18 Y2019 Outlook Market : Demand for new growth products will continue to grow in domestic market, and uncertainties in overseas markets will elevate due to rising currency risk and trade conflict LGE : Maintain solid profitability through continuous growth in domestic market, expanding premium products sales, efficient allocation and use of resources, and improving cost structure InstaView DID TWINWash LG Styler Focus on applying new technologies to our business 5 *1) From 1Q'18, Energy Management Solution, Energy Storage System has been restated to H&A division from Others

11 Performance and Outlook by Division HE (Home Entertainment) Performance *1) (Unit: %, KRW tn) 4Q 18 Performance Op. Margin 6.9% 14.0% 10.6% 8.8% 4.6% Sales : Grew QoQ led by year-end peak season in developed markets such as North America and Europe, but declined YoY due to economic slowdown in LATAM and MEA regions Sales Profitability : Down QoQ due to increasing marketing expenses from intensifying competition during peak season, and down YoY from sales decline and currency headwinds from emerging markets 4Q 17 1Q 18 2Q 18 3Q 18 Key Products 4Q 18 Y2019 Outlook Market : Global TV demand will be flat YoY, but growth trend will continue in premium TV market with OLED TVs and Ultra HD TVs LG SIGNATURE OLED TV W LG Super UHD TV (Nano Cell TV) LGE : Constantly expand premium TV portion through strengthening sales of OLED TVs and large screen Ultra HD TVs, and create virtuous cycle of simultaneous growth of revenue and profits 6 *1) From 1Q'18, ID division has been restated to B2B division from HE division

12 Performance and Outlook by Division MC (Mobile Communications) Performance (Unit: %, KRW tn) 4Q 18 Performance Op. Margin Δ7.4% Δ6.3% Δ8.9% Δ7.2% Δ18.9% Sales : Despite the launch of new competitive premium product, sales came down 16% QoQ from sluggish smartphone market and intensifying competition in mass-tier products Sales Profitability : Even though business structure was meaningfully improved, impact on profitability was offset by smartphone sales decline Loss widened as marketing expense increased in order to support launch of new product during peak season and reduce channel inventories 4Q 17 1Q 18 2Q 18 3Q 18 Key Products 4Q 18 Y2019 Outlook Market : 5G network is expected to be commercialized in major markets and devices with new form factors will be launched Smartphone demand will continue to fall and price competition will intensify LGE : Focus on operator-driven market such as North America and Korea to secure stable sales, and preoccupy 5G and new form factor device markets to capture additional sales opportunities 7 V40 ThinQ G7 ThinQ Q9 Expand sales and improve cost efficiency to enhance profit structure, and secure mid to long-term growth momentum and achieve meaningful improvement in profitability

13 Performance and Outlook by Division VC (Vehicle Components) Performance *1) (Unit: %, KRW tn) 4Q 18 Performance Op. Margin Δ2.0% Δ3.7% Δ3.6% Δ2.0% Sales : Grew 19% QoQ and 71% YoY through mass production of new projects in infotainment business and addition of ZKW Δ5.1% Sales Profitability : Profitability improved both QoQ and YoY from increasing sales supported by new projects and enhanced cost structure 4Q 17 1Q 18 2Q 18 3Q 18 Key Products 4Q 18 Y2019 Outlook Market : Market uncertainties to persist due to intensifying trade protectionism in major markets Vehicle component market to slowdown as some automakers are expected to restructure operations AV/AVN Telematics CID Infotainment Devices Traction Motor Inverter Battery Pack xev Solution ADAS Camera LCD Cluster Automotive Lamp Safety & Convenience Devices LGE : Improve fundamental of the business and secure cost competitiveness Secure long-term growth momentum through enhancing R&D capabilities and strengthening partnerships with clients *1) From 3Q'18, ZKW which was acquired in August is included 8

14 Performance and Outlook by Division B2B (Business to Business) Performance *1) (Unit: %, KRW tn) 4Q 18 Performance Op. Margin 7.1% 12.3% 6.6% 6.1% Sales : Declined YoY due to weak performance in Information Display business in MEA and LATAM regions, and sales decline in solar product in U.S market, but grew slightly QoQ 2.5% Sales Profitability : Though cost improvement trend continued, profit came down due to investment for global business expansion, solar safeguard duty, and declining solar panel prices 4Q 17 1Q 18 2Q 18 3Q 18 Key Products 4Q 18 Y2019 Outlook Market : Information Display market is expected to grow mainly in premium products Global demand for solar products will recover relative to last year but risk of supply-demand imbalance exists *1) From 1Q'18, B2B division has been newly established. ID(Information Display) business has been restated to B2B from HE division and solar panel business has been restated to B2B from Others 9 Information Display Solar Panel LGE : For Information Display business, plan to enhance sales capabilities, target new growing areas to expand sales, and improve profitability For Solar business, expand sales through market diversification and stable operation of US solar factory

15

16 Appendix Summarized Financial Statements (Consolidated) Income Statement (Unit: KRW bn, %) Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total Sales 14, % 14, % 15, % 16, % 61, % 15, % 15, % 15, % 15, % 61, % Cost of goods sold 10, % 10, % 11, % 13, % 46, % 11, % 11, % 11, % 12, % 46, % Gross profit 3, % 3, % 3, % 3, % 14, % 3, % 3, % 3, % 3, % 15, % Selling & admin expense 2, % 3, % 3, % 3, % 12, % 2, % 3, % 3, % 3, % 12, % Operating income (Loss) % % % % 2, % 1, % % % % 2, % Financial income (Expense) % % % % % % % % % % Gains (loss) on equity method investment Other non operating income (Loss) % % % % % % % % % % % % % % % % % % % % Net income before tax 1, % % % % 2, % % % % % 2, % Corporate Income Tax % % % % % % % % % % Net Income % % % % 1, % % % % % 1, % Controlled shares , ,240.1 Non-controlled shares *1) Since the information regarding results of 4Q'18 has been prepared in advance, it is subject to change in the process of final audit by external auditors 10

17 Appendix Summarized Financial Statements (Consolidated) Statements of Financial Position (Unit: KRW bn) Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Assets 38, , , , , , , ,328.4 Current Assets 17, , , , , , , ,362.9 Cash and cash equivalents 3, , , , , , , ,270.4 Accounts receivable 7, , , , , , , ,371.6 Inventory 5, , , , , , , ,021.4 Others 1, , , , , , , ,699.5 Non-current Assets 20, , , , , , , ,965.5 Investment 5, , , , , , , ,537.6 PP&E 11, , , , , , , ,334.0 Intangible assets 1, , , , , , , ,001.1 Others 2, , , , , , , ,092.8 Liabilities 24, , , , , , , ,021.5 Accounts payable 7, , , , , , , ,216.7 Debt 8, , , , , , , ,901.2 Others 8, , , , , , , ,903.6 Equity 13, , , , , , , ,306.9 *1) Since the information regarding results of 4Q'18 has been prepared in advance, it is subject to change in the process of final audit by external auditors 11

18 Appendix Sales / Profits by Division (Consolidated) (Unit: KRW bn) 1Q'17 2Q'17 3Q'17 4Q'17 '17 Total 1Q'18 2Q'18 3Q'18 4Q'18 QoQ YoY '18 Total H&A Sales 4, , , , , , , , , % 3% 19,362.0 (Home Appliance & Air Solution) Op. Income , ,524.8 (%) 11.4% 8.9% 8.6% 1.8% 7.8% 11.2% 8.7% 8.4% 2.4% 7.9% HE Sales 3, , , , , , , , , % -6% 16,208.3 (Home Entertainment) Op. Income , ,518.5 (%) 8.5% 7.7% 9.6% 6.9% 8.1% 14.0% 10.6% 8.8% 4.6% 9.4% MC Sales 2, , , , , , , , , % -42% 7,980.0 (Mobile Communications) Op. Income (%) 0.0% -5.4% -14.2% -7.4% -6.6% -6.3% -8.9% -7.2% -18.9% -9.9% VC Sales , , , % 71% 4,287.6 (Vehicle Components) Op. Income (%) -1.8% -2.2% -3.7% -5.1% -3.2% -2.0% -3.7% -3.6% -2.0% -2.8% B2B Sales , % -11% 2,405.7 (Business to Business) Op. Income (%) 5.2% 4.2% 8.5% 7.1% 6.4% 12.3% 6.6% 6.1% 2.5% 7.0% Others Sales , , , % 4% 4,152.1 Op. Income LGE Consolidated Excluding LG Innotek (1) LG Innotek (2) LGE-LG Innotek Inter-company Transaction (3) Sales 13, , , , , , , , , % -6% 54,395.7 Op. Income , , ,471.4 (%) 6.4% 4.8% 3.5% 1.6% 4.0% 8.0% 5.6% 4.7% -0.2% 4.5% Sales 1, , , , , , , , , % -15% 7,982.1 Op. Income Sales , ,036.1 Op. Income Sales 14, , , , , , , , , % -7% 61,341.7 LGE Consolidated (1+2-3) Op. Income , , ,703.3 (%) 6.3% 4.6% 3.4% 2.2% 4.0% 7.3% 5.1% 4.9% 0.5% 4.4% *1) Since the information regarding results of 4Q'18 has been prepared in advance, it is subject to change in the process of final audit 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 *3) From 1Q'18, B2B division has been newly established. ID(Information Display) business has been restated to B2B from HE division and solar panel business has been restated 12 to B2B from Others *4) From 3Q'18, ZKW is included in VC