Slide 1: Q2 ’07 Earnings Results
Q2 ’07 Earnings Results Q2 ’07 Earnings Results July 10, 2007 Attachment 2. Presentation Material
Slide 2: Disclaimer
Disclaimer Disclaimer This presentation contains forward-looking statements. We may also make written or oral forward-looking statements in our periodic reports to the United States Securities and Exchange Commission and the Korean Financial Supervisory Service, in our annual report to shareholders,
Slide 3: Q2 ’07 Earnings Results
Q2 ’07 Earnings Results Q2 ’07 Earnings Results
Slide 4: Income Statement
Income Statement Margin (%) YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 KRW b Income Statement (14) (6) Net margin EBITDA margin (16) (8) Operating margin (9) (2) Gross margin N/A N/A (322) (169) Net income N/A N/A (402) (246) Income before tax 250% 65% EBITDA N/A N/A (372) (208) Operating Income N/A
Slide 5: Balance Sheet
Balance Sheet YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 KRW b Balance Sheet (6%) 4% 7,424 6,713 6,986 Shareholders’ equity (1) Net debt to equity ratio (%) 18% 13% 3,414 3,553 4,027 Long-term debt (20%) (19%) Short-term debt 4% 2% 6,462 6,590 6,708 Liabilities (24%) (11%) 1,271 1,078 Inventory 59%
Slide 6: Cash Flow
YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 KRW b Cash Flow (34) Depreciation & Amortization (11) Others (346) (291) (217) (272) (563) Net change in working capital (281) Net change in cash (216) Financing activities (879) (165) (124) Cash flow before financing (20) (990) (492) (512) CAPEX Cash flow
Slide 7: Performance Highlights
Performance Highlights Performance Highlights
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Slide 11: Shipments and ASP
Shipments and ASP Shipments and ASP Total K m² * ASP/m² ** (USD) Source: Company financials * Net display area shipped ** Quarterly average selling price per square meter of net display area shipped Display area shipment in K m ² ASP per m ² (USD) 1,485 1,993 2,275 $1,598 $1,430 $1,414 1,000 2,000 3
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Slide 15: Revenue: Product Mix
Revenue: Product Mix 45% 28% 22% 5% 27% 21% 5% 47% 26% 21% 5% 48% Revenue: Product Mix Source: Company financials (Based on USD) Notebooks Monitors TVs Applications Q2 ’06 Q1 ’07 Q2 ’07 %
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Slide 19: Q2 ’07 Capacity Update
Q2 ’07 Capacity Update 421 409 359 389 1,082 1,092 412 418 1,211 1,162 416 362 386 437 1,228 Q2 ’07 Capacity Update P7 averaged 99K sheets per month for the quarter Source: Company financials Quarterly input capacity by Area (K m² ) P1-P3 P4 P5 P6 P7 1,000 2,000 3,000 Q2 ’06 Q3 ’06 Q4 ’06 2,808 3,07
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Slide 29: Cash ROIC
Cash ROIC Cash ROIC Source: Unaudited, Company financials * IC (Invested Capital) equals average of net debt and equity for the designated period; Quarterly ratios are annualized K GAAP (Consolidated) EBITDA margin Sales / IC* Cash ROIC 18% 124% 23% 10% 98% 10% 11% 112% 12% 19% Q2 ’06 Q3 ’06 Q4 ’06
Slide 30: Outlook
Outlook Outlook
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Slide 34: Outlook
Outlook Capex Schedule (KRW b) 260 549 Outlook Source: Company financials, delivery base Capex Schedule (KRW b) Others P7 Future production facilities 2,834 Total Shipments in m ² – Q3 ’07 vs. Q2 ’07 : Mid teens (%) ASP per m ² shipped – Average of Q3 ’07 vs. Average of Q2 ’07 : Low-single digit (%)
Slide 35: Questions and Answers
Questions and Answers Questions and Answers
Slide 36: Appendix
Appendix Appendix
Slide 37: US GAAP Income Statement
Margin (%) YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 KRW b US GAAP Income Statement (13) (6) Net margin EBITDA margin (16) (8) Operating margin (9) (1) Gross margin N/A N/A (302) (169) Net income N/A N/A (382) (242) Income before tax 237% 70% EBITDA N/A N/A (379) (205) Operating Income N/A N/A (216
Slide 38: US GAAP Balance Sheet
YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 KRW b US GAAP Balance Sheet (5%) 4% 7,362 6,698 6,965 Shareholders’ equity (1) Net debt to equity ratio (%) 19% 14% 3,415 3,540 4,052 Long-term debt (20%) (19%) Short-term debt 5% 2% 6,473 6,618 6,775 Liabilities (24%) (11%) 1,270 1,078 Inventory 59% 26% 1,
Slide 39: US GAAP Cash Flow
YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 KRW b US GAAP Cash Flow (34) Depreciation & Amortization (45) Others (364) (291) (206) (279) (570) Net change in working capital (281) Net change in cash (216) Financing activities (879) (165) (124) Cash flow before financing (20) (990) (492) (512) CAPEX Ca
Slide 40: Net Income Reconciliation to US GAAP
Q1 ’07 Q2 ’07 KRW b Net Income Reconciliation to US GAAP (4) Convertible bonds (including FX valuation) (1) (2) Stock appreciation right (2) Cash flow hedge (169) Net Income under US GAAP Others (1) ESOP (4) Income tax effect of US GAAP Adjustments Pension expense (1) (1) Capitalization of financial
Slide 41: EBITDA Reconciliation
Q2 ’07 YoY Change QoQ Change Q2 ’06 Q1 ’07 US GAAP (KRW b) YoY Change QoQ Change Q2 ’06 Q1 ’07 Q2 ’07 K GAAP (KRW b) EBITDA Reconciliation (104) (12) (115) (12) 6. Amortization of Intangible Asset (302) (169) 1. Net Income 2. Interest Expense (5) (4) (7) (8) 3. Interest Income (35) (42) (80) (73) 4.
Slide 42: EBITDA Reconciliation (Continued)
EBITDA Reconciliation (Continued) EBITDA Reconciliation (Continued) EBITDA is defined as net income (loss) plus: interest income (expense); provision (benefit) for income taxes; depreciation of property, plant and equipment; amortization of intangible assets; and amortization of debt issuance cost.
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Slide 44: New Direction
New Direction July 10, 2007 New Direction 1. Status of Major Action Items 2. Current Issues 3. Profitability in ’07 4. Mid-long Term Strategy
Slide 45: 1. Status of Major Action Items
1. Status of 1. Status of Major Action Items 1) Maximize capacity by shortening Tact Time (maximize equipment efficiency) 2) Maximize existing production capabilities by minimizing operating losses (challenging the limit) 3) Expect to show visible results gradually in Q3 3. Production Capacity Expan
Slide 46: 1. Status of Major Action Items
1. Status of 1. Status of Major Action Items 1) Fully utilized from May through volume increases from major customers including LGE, Philips 5. Increasing P7 Utilization Form a strong organization culture which will challenge limits through consideration management Customer-oriented mindset Voluntar
Slide 47: 2. Current Issues
2. Current Issues 2. Current Issues 1) Decided not to invest in Gen 5.5 equipment, considering the possible increasing capacity from the existing fabs 2) Studying Gen 8 investment targeting ramp up in 1H ’09 considering market situation 2. Future Investment 1) Possibility for Philips to sell some po
Slide 48: 3. Profitability in ’07
3. Profitability in ’07 3. Profitability in ’07 1) Continuous shortage in TV supply is expected 2) Shortage in MNT and NBPC and ASP increase are expected 3) Active sales of lower-cost models, O/H cost reduction, increase of capacity is expected Q3 ’07 Concerns on PDP price decline, however the short
Slide 49: 4. Mid-long Term Strategy
4. Mid-long Term Strategy 4. Mid-long Term Strategy Enhancing procurement competitiveness through win-win strategy Competitive fab through Max Capa & Min Loss and high yield Continuous overhead cost reduction 2. Cost Competitiveness Enhancing product planning Co-design & co-location 3. TV Customer B