Inside your life! Fourth Quarter 2018 Results January 25, 2019 Mobile Automotive Display Semiconductor IoT LED
Contents Ⅰ. Q4 2018 Results Ⅱ. Results & Outlook by Business - Financial Summary Disclaimer This presentation may contain forward-looking statements, which were made on the basis of the information available at the time of preparation and on management's expectations and assumptions. However, such statements are by their nature subject to known and unknown risks and uncertainties. As a result, actual developments, results, performance or events may vary significantly from the statements contained explicitly or implicitly herein. Neither LG Innotek, nor any of its directors, officers, or employees accept any responsibility or liability(for negligence or otherwise) for any loss whatsoever out of the use of or otherwise in connection with this presentation. LG Innotek undertakes no obligation to update or revise any forward-looking statements, whether as a result of changed assumptions or expectations, new information or future events.
Q4 2018 Results Posted revenue of \2,430.5bn and operating income of \103.6bn Q4 18 Financial Results Revenue & Profitability (bn won) Q3 18 QoQ Q4 18 YoY Q4 17 Revenue Operating Margin (bn won) Revenue 2,313.2 +5.1% 2,430.5-15.3% 2,869.8 Operating income 129.7-20.1% 103.6-26.6% 141.2 5.6% 4.3% 4.9% (%) 5.6% -1.3%p 4.3% -0.7%p 4.9% Income before tax 116.9-50.8% 57.6-51.9% 119.6 Net income 93.7-32.5% 63.2-26.8% 86.4 EBITDA * 253.7-7.3 246.4-6.2 252.6 2,313.2 2,430.5 2,869.8 (%) 11.0% -0.8%p 10.1% +1.3%p 8.8% CAPEX 232.0-110.4 121.6-385.1 506.7 Q3 18 Q4 18 Q4 17 * EBITDA = Operating income + Depreciation + Amortization 1
Q4 2018 Financial Position Net debt rose due to continued investments into main businesses Financial Position (bn won) Q3 18 QoQ Q4 18 YoY Q4 17 Financial 사업부문별 Ratios 매출 Liability-to-equity Net Gearing Net Debts(tn won) Total assets 6,125.1-6.0% 5,756.1-2.1% 5,877.5 Current assets 2,462.6-9.3% 2,233.3-18.3% 2,734.5 122% 143% 201% 172% Cash & equiv.* 344.7 +80.2% 621.2 +68.1% 369.5 Non-current assets 3,662.6-3.8% 3,522.7 +12.1% 3,143.0 40% 42% 58% 71% Total liabilities 4,086.0-11.0% 3,637.8-7.4% 3,926.7 Current liabilities 2,192.0-27.7% 1,584.4-36.6% 2,497.2 Non-current liabilities 1,894.0 +8.4% 2,053.4 +43.7% 1,429.5 0.70 0.74 1.13 1.51 (Total debts) 2,043.5 +4.1% 2,126.7 +41.5% 1,502.6 2015 2016 2017 2018 Total equity 2,039.1 +3.9% 2,118.2 +8.6% 1,950.8 Q4 18 net interest expenses \14.5bn * Cash & equivalents = Cash + Deposits (including foreign deposits) 2
Optic Solutions Results & Outlook Q4 18 Highlights - Increased production of new models for key customers - Demand from domestic and Chinese customers remained slow Q1 19 Outlook - Sales to decline on sluggish demand in end markets - To supply new products to the main domestic customer Key Strategies Reinforce global leading position - Develop market-leading products for key customers - Secure new technologies / Enhance quality competitiveness Diversify customer base / Improve cost competitiveness - Expand customer base by offering differentiated solutions - Reorganize production sites and enhance productivity to ensure higher profitability Sales Trend Sales Breakdown Q4 18 Sales : QoQ 5%, YoY 20% (bn won) By Camera Pixel-size 12Mp & Above 8Mp & Lower 2,083.7 1,014.1 813.8 1,595.2 1,673.8 91% 87% 92% 94% 96% Q4'17 Q4 17 1Q'18 Q1 18 2Q'18 Q2 18 3Q'18 Q3 18 4Q'18 Q4 18 Q4'17 Q4 17 Q1'18 Q1 18 Q2'18 Q2 18 Q3'18 Q3 18 Q4'18 Q4 18 3
Substrates & Materials Results & Outlook Q4 18 Highlights - Started the production of next generation photomasks; HDI sales increased on a sequential basis - 2Metal COF sales declined on slow demand in end markets Key Strategies Further improve profitability - Diversify customer base and gain market share in the next generation photomask business - Continue to reorganize the HDI business Q1 19 Outlook - Sales to decline on weaker seasonality in the mobile market Strengthen core technologies for future growth - Enhance fine pitch packaging and mounting technologies - Develop products for 5G, OLED, and high resolution applications Sales Trend Main Products Q4 18 Sales : QoQ 6%, YoY 4% (bn won) Substrates Materials 324.5 23% 262.2 25% 295.1 291.5 25% 21% 310.1 23% Mobile 77% 75% 75% 79% 77% Display Q4'17 Q4 17 Q1'18 Q1 18 Q2'18 Q2 18 Q3'18 Q3 18 Q4'18 Q4 18 Substrates : HDI, Tape Substrate, Package Substrate / Materials : Photomask, Touch Window 4
Automotive Components Results & Outlook Q4 18 Highlights - Motor/sensor and communication module sales increased on a sequential basis - ADAS camera and EV power sales continued to grow Q1 19 Outlook - ADAS camera and EV power to maintain strong growth - Continue to secure new orders and improve profitability Sales Trend Key Strategies Improve business structure - Expand platform products / Improve manufacturing efficiency - Develop high-value hybrid modules and new EV parts - Expand orders from overseas / Stabilize overseas production Enhance the competitiveness of new businesses - Expand auto. camera and LED product lines / Enhance cost competitiveness - Joint development of new products with customers Main Products / New Order Trend Q4 18 Sales : QoQ 10%, YoY 22% (bn won) Camera/Power/LED 217.0 219.0 66% 63% 34% 37% Motor/Communication 239.9 239.6 53% 51% 264.7 51% 47% 49% 49% EV/Autonomous Products Order Trend * Battery Management System New Orders Accumulated Backlog Q4'17 Q4 17 Q1'18 Q1 18 Q2'18 Q2 18 Q3'18 Q3 18 Q3'18 Q4 18 2014 2015 2016 2017 3Q18 1.5 4.0 2.8 6.2 2.6 7.3 3.0 9.5 2.9 12.0 2014 2015 2016 2017 2018 (tn won) 5
LED Results & Outlook Q4 18 Highlights - Sales declined on weaker demand and ongoing restructuring Q1 19 Outlook - Sales expected to grow slightly on a sequential basis - UV and auto. LED sales to continue to grow Key Strategies Expand contribution from high-value products - Continue to expand UV LED applications - Diversify auto. LED customers / Expand new orders Focus on improving operational efficiency - Improve productivity / Continue cost innovation Sales Trend High-value LED Line-up Q4 18 Sales : QoQ 22%, YoY 31% (bn won) Lighting/Auto./UV BLU 136.7 124.8 43% 39% 117.1 120.4 43% 51% 94.3 38% UV LED 57% 61% 57% 49% 62% Auto. LED Q4'17 Q4 17 Q1'18 Q1 18 Q2'18 Q2 18 Q3'18 Q3 18 Q3'18 Q4 18 * Daytime Running Lamp 6
Financial Summary Income Statement 2017 2018 (bn won) Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Revenue 1,644.7 1,339.6 1,787.2 2,869.8 7,641.4 1,720.5 1,517.9 2,313.2 2,430.5 7,982.1 Operating income 66.8 32.5 55.9 141.2 296.5 16.8 13.4 129.7 103.6 263.5 Operating margin 4.1% 2.4% 3.1% 4.9% 3.9% 1.0% 0.9% 5.6% 4.3% 3.3% Income before tax 53.2 23.6 42.3 119.6 238.7-10.5 20.0 116.9 57.6 184.0 Net income 36.6 17.0 34.8 86.4 174.8-9.7 15.9 93.7 63.2 163.1 Financial Position 2017 2018 (bn won) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Assets 4,032.4 4,245.7 5,128.2 5,877.5 5,183.7 5,487.2 6,125.1 5,756.1 Current Assets 1,832.6 1,867.9 2,356.5 2,734.5 1,894.6 1,988.2 2,462.6 2,233.3 Cash & Equivalents 351.9 456.4 346.2 369.5 333.9 325.9 344.7 621.2 Non-current Assets 2,199.8 2,377.8 2,771.7 3,143.0 3,289.1 3,499.0 3,662.6 3,522.7 Total Liabilities 2,247.0 2,430.1 3,266.5 3,926.7 3,237.2 3,520.1 4,086.0 3,637.8 Current Liabilities 1,168.0 1,242.4 1,972.7 2,497.2 1,741.3 1,734.3 2,192.0 1,584.4 Cash Flow (bn won) Q3 18 Q4 18 Cash at the beginning of period 325.9 344.7 Cash flow from operating activities 299.0 471.1 Net income/loss 93.7 63.2 Depreciation 127.1 146.7 Change in working capital (53.4) 134.7 Others 131.6 126.4 Cash flow from investing activities (382.9) (276.3) Increase in tangible assets (359.6) (245.9) Increase in intangible assets (21.3) (30.5) Cash flow from financing activities 105.0 81.4 Increase / Decrease in debt 105.0 81.4 FX effect from cash denominated in foreign currency (2.3) 0.4 Net changes in cash 18.8 276.6 Cash at the end of period 344.7 621.2 Non-current Liabilities 1,079.0 1,187.7 1,293.8 1,429.5 1,495.9 1,785.8 1,894.0 2,053.4 Shareholder s Equity 1,785.4 1,815.6 1,861.7 1,950.8 1,946.5 1,967.1 2,039.1 2,118.2 Total Debt 1,104.8 1,250.9 1,397.5 1,502.6 1,588.1 1,940.7 2,043.5 2,126.7 Liabilities-to-Equity 125.9% 133.8% 175.5% 201.3% 166.3% 178.9% 200.4% 171.7% Net Gearing Ratio 42.2% 43.8% 56.5% 58.1% 64.4% 82.1% 83.3% 71.1%
Sales Trends by Division (bn won) 2017 2018 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Optic Solutions 924.2 634.9 1,035.7 2,083.7 4,678.5 1,014.1 813.8 1,595.2 1,673.8 5,096.9 Substrates & Materials 263.9 270.6 283.1 324.5 1,142.1 262.2 295.1 291.5 310.1 1,158.8 Automotive Components 227.5 195.6 212.6 217.0 852.7 219.0 239.9 239.6 264.7 963.3 LED 167.3 176.8 170.7 136.7 651.6 124.8 117.1 120.4 94.3 456.5 Others* & Inter-company Transactions 61.7 61.6 85.2 107.9 316.5 100.6 52.2 66.5 87.6 306.6 Total Revenue 1,644.7 1,339.6 1,787.2 2,869.8 7,641.4 1,720.5 1,517.9 2,313.2 2,430.5 7,982.1 * Others : Include the Electronics business and ESL, which were previously included under the Automotive Components division