LG 2001 Annual Report Download - page 15

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With the successful launch
of a CRT joint venture with
Philips, we generated $1.1
billion in proceeds, most of
which we put towards debt
reduction.
LG Electronics Inc. The
43
rd Annual Report
Message from CFO
2001Review
Despite turbulence in the global economy, LG Electronics managed to achieve its initial
target of 16.6 trillion won, laying a strong foundation for financial improvement. In 2001 we
went through a difficult restructuring process, fine-tuning our operations for a clean start
after the planned demerger. With the successful launch of a CRT joint venture with Philips,
we established ourselves as market leaders in the CRT industry and generated $1.1 billion
in proceeds, most of which we put towards debt reduction
Operating Profit
Due to a slowdown in the IT industry, Digital Display & Media, which accounts for 41%
of our total sales, experienced severe pressure from our competitors. It also required
serious restructuring, with Telecommunication System suffering from reduced CAPEX
spending by major telecom operators. Digital Appliance, however, reasserted itself as a
reliable earning base by showing more than 12% operating margin, while Digital Handset
showed remarkable growth and improved profitability. All in all, operating profit for LGE
as a whole slid to 4.8%.
Recurring Profit
A recurring profit of 573.7 billon won reflects a variety of important developments.
We received about 1.4 trillion won in proceeds from CRT business spin-offs, while taking a
901.5 billion won loss from equity accounts, including the onetime goodwill amortization of
Dacom shares. With the sale of Dacom shares we incurred a loss of 374.9 billion won.
Net profit & EBITDA
Net profit remained at a level similar to that of 2000, due to lower tax payments.
EBIDTA with 625 billion won in depreciation posted 1.4 trillion won level, a similar level to
2001. Again, we find this encouraging considering much worse business environment in
2001.
Debt Position
US $1.1 billion received from CRT spin-off was used to pay off 640 billion won of our
debt as well as redeemed 544 billion won in redeemable preferred stock. As a result, we
were able to bring down our gearing level from 118% in 2000 to 95% in 2001. Residual
debt at the end of 2001 stood at 4.1 trillion won.
Capital
Debt Ratio
1999
2000
Debt / Unit : Trillion KRW
106
%
118
%
95
%
2001
Operating profit 796.0 921.1 684.0
Ordinary profit 573.7 728.5 2,587.9
Net profit 507.3 502.2 2,005.0
2001 2000 1999
Unit : Blllion KRW
3
.
3
4
.
7
4
.
1
3
.
2
4
.
0
4
.
3
Profits