Lg Elec S/Gdr 144A

Good morning and good afternoon. Thank you for joining LG Electronics Earnings Release conference call for the fourth quarter of 2020. This conference call will start with a presentation on the earnings results followed by a Q&A session at which time if you wish to ask a question, you will need to press star and 1 on your telephone. I would now like to hand the conference over to the first speaker. Good afternoon. My name is Sang Bo Shim from Investor Relations. Thank you for joining LG Electronics Earnings Release Conference Call for the fourth quarter of 2020. With me are representatives of business management division of each business, Mr. Lee Gong Kim from Home Appliance and Air Solutions, Mr. Jung Hee Lee from Home Entertainment, Mr. Dong Myung Seo from Mobile Communications, Mr. Jin Yong Pae from Vehicle Component Solutions, Mr. Chung Hyun Park from Business Solutions, We are also joined by Mr. Hongsoo Lee from Accounting Division, Mr. Sangwoo Park from Corporate Business Management Division, and Mr. Hyunggyu Lee from Finance Division. Please be noted that all statements we will be making today regarding our financial results of the fourth quarter are subject to change in accordance with the results of the external review. I would also like to remind you that uncertainties in the market and changes in strategies may cause our results to be different from the outlooks and forward-looking statements made today. First, I will outline the overall performance results of the fourth quarter of 2020 and the outlook for year 2021 and the first quarter of 2021. After that, each division will take turns to deliver its business results and outlook. Let me start with the consolidated financial results of the fourth quarter of 2020 and the outlook for year 2021 and the first quarter. Consolidated sales of the fourth quarter was $18.8 trillion won and operating income was $650.2 billion won. Sales grew 17% year-on-year, driven by increased sales from premium products and new appliance categories in H&A, expanded product sales of OLED TVs in HE, and significant growth in sales in VS. Despite the impact from COVID-19, operating income was greatly improved year on year thanks to better profitability based on increased sales of premium products in the appliance and TV businesses and from online channels and sales growth in the vehicle component business on the back of the recovery of global demand. I will now briefly review the fourth quarter performance of each business. H&A recorded $5.5 trillion in sales, $299.6 billion in operating income, and 5.4% in profitability. H&E recorded $4.3 trillion in sales, $204.5 billion in operating income, and 4.8% in profitability. MC recorded 1.4 trillion won in sales and 248.5 billion won in operating loss. GS recorded 1.9 trillion won in sales and 2 billion won in operating loss. GS recorded 1.5 trillion won in sales, 70.3 billion won in operating income, and 4.7% in profitability. Further details by business will be covered in later slides. Let's move on to the profit and loss and cash flow of the fourth quarter. In terms of profit and loss, our net income, reflecting financial income and expense, equity method gain and loss, other non-operating income and expense, and corporate income tax, posted 262.3 billion won. Cash flow from operating activities of the fourth quarter was 1.5 trillion won, and cash flow from investment activities was negative 1.2 trillion won. As a result, net cash flow amounted to 187.9 billion won and when reflecting cash flow from financial activities of negative 814.6 billion won, cash balance at the end of the fourth quarter decreased by 626.7 billion won quarter on quarter to stand at 5.9 trillion won. Next is the key financial position and indicators for the fourth quarter of 2020. As of the end of the fourth quarter, our assets stood at 48.2 trillion won, liability at 30.7 trillion won, and equity at 17.5 trillion won. All leverage ratios, liability to equity, debt to equity, and net debt to equity decreased quarter on quarter, maintaining a healthy financial condition. Next is the outlook for year 2021 and the first quarter of 2021. In terms of the macro environment, there are concerns of polarization by industry in the global market with the recurring COVID-19 outbreaks and slow recovery of the real economy. However, there are also expectations that the global economy will be quick to normalize based on the economic stimulus packages of governments including the U.S. and the effect of COVID-19 vaccination. This year, we will seek to widely apply core technologies such as AI, 5G, IoT, and mobility to all business areas. In particular, in the home appliance and TV businesses, we will actively expand sales of appliances with hygienic and space design features and OLED TVs. At the same time, we will continuously respond to the market demand for products in line with the new normal. Aligned with this direction, we will continue along the path of profitable growth in 2021, and our first quarter sales, excluding LG Inateck, is expected to record a significant growth year-on-year. We expect to maintain stable profitability based on strong sales from home appliance and TV businesses. Now, let's move on to the fourth quarter results and outlook by business. First is H&A. Let me share the fourth quarter results of H&A. Sales recorded a double-digit growth in both Korea and overseas, standing at 5.5 trillion won with a 20% growth year-on-year. In terms of profit, operating profit improved year-on-year, driven by sales growth across all regions and cost structure improvement. Next is the outlook for year 2021 and the first quarter. In 2021, there are growing expectations of a market recovery and an economic upturn with the start of the COVID-19 vaccination. The business risks are expected to be higher than ever with market uncertainties from unfavorable foreign exchange rates, raw material prices, and logistics prices. Amidst this environment, in terms of sales, we expect to continuously maintain growth year-on-year by strengthening our market position in main businesses and expanding our incubating and strategic businesses. We will also focus our efforts to create stable profitability similar to the levels of the previous year through efficient resource management and cost-saving activities. In the first quarter, we expect sales growth to continue year-on-year for all overseas regions and like the previous year, we seek to maintain stable profitability. I will share the fourth quarter results of HE. Sales increased year-on-year thanks to the growth in advanced markets such as North America and Europe. LCD panel prices increased significantly due to the supply shortage, but operating profit improved year-on-year, driven by the increased sales proportion of premium products and efficient resource management. Now let me share the outlook for year 2021 and the first quarter. In the market, global TV demand is expected to continue its growth with more people spending time at home due to the non-face-to-face trend brought on by COVID-19. Accordingly, we plan to maintain revenue growth and profitability by expanding sales of premium products such as OLED, NanoCell, and large-size TVs. In the first quarter of 2021, though there is upward pressure on cost Due to the supply shortage of LCD TV panels, we seek to maintain sound profitability based on sales increase in advanced markets such as North America and Europe and efficient resource management. Let me share the fourth quarter results of MC. In terms of sales, mass-tier products maintain solid sales. There were some disruptions in supply due to the 4G chipset shortage, and premium products recorded sluggish sales compared to expectations, leading to sales recording a decrease of 9% quarter-on-quarter and a growth of 5% year-on-year. In terms of profit, fixed costs were reduced by enhancing efficiency of production sites and increasing the ODM business proportion. but with the sluggish sales of premium products, profitability decreased quarter on quarter. Now the outlook for year 2021 and beyond. With the 5G market taking off in earnest, the global demand for smartphones is expected to recover to pre-COVID-19 levels, but competition in the market is expected to intensify. We plan to closely review the direction of the business by objectively considering our current and future competitiveness. We will share our business direction once it is determined. Let me share the fourth quarter results of VF. Sales increased year-on-year and quarter-on-quarter driven by the recovery of demand in key automotive markets such as North America and Europe and expanded sales from new projects. As for profit, operating loss was reduced year-on-year and quarter-on-quarter thanks to the sales increase with the recovery of market demand in the second half and cost reduction activities. For the outlook, we have missed the recovery in the global automotive market We expect fierce competition in connected and electric vehicle markets, which are projected to record high growth. We will maximize sales by actively responding to the recovery in the market and strengthen our business competitiveness through reinforcement of infotainment software capabilities and early stabilization of the electric vehicle component JV with Magna. I will share the fourth quarter results of BS. Sales increased year on year, driven by sales growth in IT products related to the continued demand from the non-face-to-face lifestyle of remote working and online learning. Operating profit fell year-on-year due to the increase of major component prices and global logistics costs. Now the outlook for year 2021. The demand for IT products related to the contact-free trend is expected to continue. And in information display, we expect a gradual recovery of demand in the second half. For solar business, demand is expected to pick up with the increased targets for renewable energy and implementation of supporting policies in major markets such as the US and Europe. In this market environment, we will exert efforts to enhance sales and improve profitability by actively responding to the expanded demand related to the non-face-to-face trend in the IT business, focusing on verticals such as education and corporate information display, and reinforcing product competitiveness such as power features in solar. That brings us to the end of the fourth quarter earnings release and the outlook for year 2021 and the first quarter. We will now take questions. Operator, please commence with the Q&A session.

The first question will be presented by Ji-San Kim from Kium Securities. Please go ahead with your question.

Thank you for your question. There are two questions. The first question is about the MC business. If the MC business is able to withdraw, there is a concern that the future business may be in danger, such as IoT, robots, autonomous vehicles, etc. Are there any ways to respond to this? The second question is related to the HE business. I have two questions, first for mobile business and second for home entertainment. First, mobile business. If you decide to withdraw from the smartphone market,

There are concerns that it may impact your future businesses regarding technological competencies on IoT, robot, and autonomous driving. What are your plans to respond to these possible risks? My second question regards home entertainment business. During the coronavirus pandemic, the demand for home entertainment increased and your business enjoyed growth in the demand, having better performance than the expectation. What is your prediction of the market demand for 2021?

Mr. Lee, I will answer your question. The key mobile technology of our company is not only the smart home appliances, but also the important assets of the car and electric business. Let me answer your first question regarding mobile business.

All of the mobile related technologies and competencies are important assets, not just for the mobile business, but also for smart home appliances, In order to keep up with the market and technology trend of, for example, IoT and v2x, not only MC but CTO has been continuously working on research and development related to these technologies. In order to internalize all of those important assets so that we can make sure that we create synergy with our future businesses, we are currently reviewing diverse options. We'll be able to share with you the details of this plan once our overall direction of the business is determined.

Let me answer your questions regarding home entertainment business. According to market research,

We expect the TV market demand in 2021 to slightly increase compared to the previous year. If we divide the year into the first half and the second half, in the first half, we believe that the demand increase that we saw last year due to the contactless activities will continue into the first half. But in the second half, as the out-of-home activities and engagement increases thanks to the introduction of vaccines and treatments, PV demand is likely to fall.

And if you look at the market, the current market is expected to have a large growth of 20 years, with a small growth of 21 years, and other growth markets expect to grow 21 years more than 20 years.

If we break that down into markets, in the advanced market, as we saw significant growth in 2020, we believe that the market demand will slightly drop in 2021. For emerging markets, we believe that the growth in 2021 will be stronger than that of 2020. Next question, please.

The next question will be provided by Lee from Samsung Securities. Please go ahead with your question. Yes, hello.

Congratulations on achieving good results in the difficult business environment. I have two questions for the H&A and V.S. departments. First of all, the H&A department has shown a sharp increase in the number of people living in 2020 due to the COVID-19 pandemic. Elec S & Gdr 144A Elec S & Gdr 144A I have two questions. First, my first question is related to H&A. Due to impact of COVID-19, we saw a dramatic increase of demand for home appliances in year 2020.

and can you share the current status of the global demand compared to the end of October? And can you also forecast the year 2021? I believe that strong demand of traditional home appliances was attributable to strong housing market in the United States. And considering the existing replacement cycle for the traditional appliances, can you share your sales upside for 2021 And my second question is related to VES. With the establishment of the joint venture with Magna, there were and there will be many changes within VES company. So, can you share your overall corporate strategy in regard to this point?

HNA I will take the question regarding H&A. The global demand for home appliances in 2021 will show a meaningful expansion centering around large capacity and products featuring hygiene and healthcare functions. The recent market analysis shows that the growth market, which is centered around Europe, is increasing in volume and steam market. The demand for hygiene and health products is seen to have been reduced compared to major products such as general refrigerators and washers. As a result, demand is expected to expand further.

According to the recent market research, we found out that in the advanced market, such as the European region and the green market, we saw an increase of market demand for large capacity and the product with thin functions. And during a certain period of time, the demand for the product featuring hygiene and healthcare functions showed a slower decrease compared to the major home appliances, So given that, we forecast the demand for those products to continue to grow. In the past, people used to give a lot of thoughts for buying the necessity products. However, recently, like they are buying the IT devices, they are keenly interested in the new products and new category home appliances featuring new technologies.

In this respect, we expect that there will be an increase in demand for high-end materials, including high-tech materials, And we forecast the demand for the product with high specifications such as the large capacity and product with hygiene and healthcare functions and high technology to continue to grow.

and if we capture these opportunities and link it into the actual sales opportunity, then we believe that we can shorten the replacement cycle for the traditional appliances as well. As you already know, we are running three different businesses, infotainment, electric vehicle component, and vehicle lamps.

Based on our growth, our target is to become the top tier supplier for vehicle components. If I explain the business strategy by business segment for the infotainment area, we are focusing on the development of software capability.

For the electric vehicle component area, through the joint venture that we are going to establish, we will focus on integrated power generating module, which is the key component for the JV. And for the vehicle lamp area, we are going to solidify our company's standing by expanding the OEM customer base of this VKW. Also, we are going to enter into a domestic brand so that we can expand our portfolio for our product and programs.

I will take the next question. The next question will be presented by Jungwoo Goh from NH Investment and Securities. Please go ahead with your question.

Hello, I am Jungwoo Goh from NH Investment and Securities. First of all, thank you for giving me the opportunity to ask a question. I have two questions related to H headquarters TV. The first question is, LG Electronics is launching a mini-LED TV this year. In some respects, there is an opinion that the cannibalization of OLED TV is in danger. Regarding this, please tell us how you will advance the mini-LED TV and OLED TV business strategy direction. Second, I would like to ask you a question about profitability in this year's TV business. I have two questions regarding TV business. First, regards

the mini LED TV that you introduced this year. Some are concerned that there can be sales cannibalization of OLED TV due to the introduction of mini LED TV. Can you share with us your strategic directions for each product group, mini LED TV and OLED TV? My second question regards the profitability of TV business in 2021. You have already shared with us the overall market projection. But considering the increasing panel price and supply issues of the chipsets, what is your expectations of sales revenue for 2021?

Yes, I will tell you about it from the HEE headquarters. The HEE headquarters that I introduced in the technical seminar Let me answer your question first about the mini LED TV.

Mini OLED TV that we introduced last December during the technology seminar is an LCD TV adopted with a new technology. For OLED TV, however, our strategy of putting OLED TV at the top of our premium segment remains unchanged.

The reason is that OLED TV has its own advantages, such as infinite contrast, accurate color, and response speed, so I think that OLED TV's customer base will remain the same, such as customers who value contrast and color when watching movies and customers who want fast response speed when playing games.

Regarding the concerns of possible sales carnivalization of OLED TVs, actually, we don't have any concerns regarding it because OLED TV has its unique and distinctive strengths such as contrast ratio, accurate color, and fast response speed. Therefore, people who are in search of better contrast ratio and color for enjoying movies or customers for looking for faster speed for playing games will be maintained as the customers of OLED TVs.

On the other hand, for Mini-LED, we believe that out of the existing LCD customers,

Those who want slimmer LCD TV with slightly more OLED-like picture quality would get very interested in this product.

Therefore, we will operate on the strategies

different strategies for OLED and Mini LED TV tailored to the different needs of the customers.

Let me answer your second question. The cost pressure from

increased panel price and supply crunch of chipsets will persist.

However, in this situation, the company plans to expand premium product sales such as OLED TVs, NanoCells, and Mini LEDs, which I mentioned earlier, and maintain market governance and profitability through this.

However, in spite of these difficulties, we plan to increase our sales of premium products such as OLED TV, NanoCell TV, and Mini LED TVs. Through this, we plan to strengthen our market position and strengthen the profitability.

Next question, please.

The next question will be presented by Nicola Godoa from UBS. Please go ahead with your question.

Good afternoon and thanks for taking my questions. On the vehicle solutions, obviously in the call in December for the announcement for the transaction of Magna, you provided some very useful targets for the powertrain business, which will go into a joint venture. But for the rest of the business, how do you consider the revenue growth over the next three years and where operating margins will go during the same period of time and why? And secondly, to go back to a couple of questions you already had on plans and TV revenue performance, which was, of course, very strong in H220 for LG. I know you just commented on demand in both cases, but is there any way you could try to handicap how much of that performance was actually demand pulling during COVID-19 due to stay at home? Thank you.

I would like to ask a question about BS. You officially announced the establishment of a Magna and a joint law firm. And you also explained the goal of e-PowerTrain. Then, except for e-PowerTrain, I would appreciate it if you could share with us how you plan to run the rest of the business for the next three years. And also, for the same three years, please explain the operating margin of those businesses and what the reason is. Elec S & Gdr 144A

Let me take your question regarding VS. If I explain our sales of the previous year,

stood at 5.8 trillion won, and until 2024, we forecast our growth to be 15% per year.

Regarding the sales by our product segment,

I explained that our overall sales growth will be 15% per annum, and if I explain the electric vehicle component, it will show 30% per year compared to other product groups. If I explain the profitability by product, our top priority for this year is to make a turnaround this year.

The profitability target by product group

However, our mid-to-long-term goal in terms of our profitability or OI is 5% or higher.

H&A, I will talk about it. As I mentioned earlier, the 21st-century market is a market that has a lot of pent-up demand Let me answer for H&A. Like I said during the presentation for HE, if I explain the market for 2021,

Elec S & Gdr 144A and also as the competitor is going to address the supply issue, we believe that the competition is likely to get fiercer.

Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A

for our sales for 2021. We are expecting an increase in the second half as we are seeing an increase in this period by increasing the demand in the advanced market and also replenishing the pipeline in the channel. And also, in the second half of this year, in response to potential decrease of demand and competition which may become fiercer in the market, we are going to continue to grow with our premium product and high-tech product and also other products which can be used to expand our coverage in the market.

Let me answer for HE. Starting from the third quarter of last year, we saw an increase of pent-up demand due to impact of COVID-19.

and we were able to record a good achievement in the 3rd quarter and 4th quarter of the previous year.

However, due to the rapid rise in the panel price since June last year, the increase in demand has greatly worsened the profitability due to the pressure on the capital.

However, starting from June last year, we saw a dramatic increase of panel prices. So, we are actually taking on the pressure in terms of cost, and that will also impact our profitability.

However, in the latter half of the year, we achieved profitability due to the increase in sales of premium products such as OLED, NanoCell, and ultra-large-size TVs.

In the second half, we secured profitability by improving our product mix with OLED TV, NanoCell TV, and large-sized screens.

In 2021, we plan to maintain profitability by expanding the premium sales of OLED, NanoCell, and ultra-large-sized TVs.

Thank you.

I will take the next question, please. The next question will be presented by Loco Kim from Hana Financial Investments. Please go ahead with your question.

In terms of appliances, I know that the domestic performance of new-growth appliances with high profitability is very good, but I would appreciate it if you could tell us about the balance in the appliances business. And in addition, please tell us what kind of balance the export balance looks like when you look at it only with new-growth appliances. As you said earlier, the electric field is a year-long BEP. I have two questions, one for H&A business and the other for vehicle solution business. First, H&A business.

The profitability of the incubating businesses and products has been really good. It was actually better than what many have expected. So can you share with us the percentage of this incubating business in your overall business? Additionally, regarding this incubating business of H&A Division, can you share with us the percentage of its sales in the overseas market and also the trend and any plans and prospect for the sales in the overseas market. My second question regards vehicle solution business. Your plan is to reach BP and swing to profit in the second half of this year. But when I look into the figures and performance of the fourth quarter, your deficit amount was a mere $2 billion. So, I was wondering perhaps you can turn around earlier than your original plan. So, could you share with us your take on this and also share with us the ground and reasons why you believe that you'll be able to reach BEP this year?

HNA 말씀드리겠습니다. 자산은 시장 트렌드 센싱 및 고객 인사이트 발굴을 통해서 Let me answer your questions from H&A side.

H&A division is continuously expanding new businesses and new product groups by sensing the market trend and identifying customer insight.

All of these activities are based on our efforts to address customer pain points based on smart home appliances and digital transformation.

At the same time, we are maximizing customer value with market-leading and trend-leading insights. Regarding the new product that you mentioned, its sales in the overseas market continues to grow. In 2020, the sales of the new growth or incubating businesses took up more than 40% of the overall sales of the H&A business. In 2021, we believe they will be able to maintain similar level.

Let me answer your questions regarding vehicle solution business. Our plan to swing to profit in 2021 remains unchanged.

We still do have uncertainties in the market for the second half of this year. For example, possible supply crunch of semiconductors.

However, starting from the third quarter of last year,

We are seeing a recovery of demand in the automobile market, and according to this change, our sales continues to rise. Therefore, we are targeting to make a turnaround in the second half. Please understand that I cannot specify exactly when in the second half we will make a turnaround. But starting from the last year, although new projects that we won are now going into the mass production, so we believe that our sales in the second half will increase.

Next question, please. The next question will be presented by Sungyeol Kwon from DB Financial Investment. Please go ahead with your question.

Thank you for the question. I have two questions for you. First, I am curious about the CapEx plan for this year. I'm curious if there are any changes in the plans of Magna and Joint Venture to establish CapEx or Juju. Secondly, I'm curious about the future direction of each product related to the business solution headquarters. In particular, while the demand for IT products in 2020 was strong, My first question is regarding the corporate-wide basis. I want to understand your plan for CAPEX investment with the establishment of the joint venture with METNA

I'm wondering if there is any change in your plan regarding CapEx and your policy to return your earnings to shareholders. And my second question is related to B2S. I want to understand the trend by product segment within the B2S business. And if you look at the performance of 2020, the IT products show a strong demand while the demand for signage and solar were quite dampened. So I'd like to understand your forecast by product segment for this year, 2021, and I hope you can help us understand your view when you expect the solar and signage businesses will get back to normal.

Let me answer regarding your point regarding capex. So we will stand by our plan to invest our capex within the EBITDA level

and we forecast the EBIT level for 2021 to stand at near 2 trillion KRW.

And also impacted by the establishment of the joint venture with Magna,

If we need to invest additional resources for production capacity, we are going to take on that burden jointly with Magna, so there will be no big burden related to CapEx investment.

And lastly, regarding the plan for the return of shareholders, the Party will continue to take into account the changes in the domestic and foreign business environment, and we will make efforts to return the shares to the shareholders in a stable way for future investment and financial structure.

Regarding your point of returning your earnings to shareholders, I'd like to say that our company will strive to share our earnings with our shareholders by reaching a stable balance between our investment for the future and ensuring financial indicators by considering the environmental factors in and outside the company.

Let me take your question regarding BS. As I explained during the presentation regarding the four-quarter treatment and the outlook for 2021,

the impact of COVID-19 created a wide difference by product segment in B2B. Regarding the IT product, Due to impact of more prevalent trend related to working from home and online learning, we saw a dramatic increase of the monitor and zip product sales, and we also forecast this trend to continue in this year, 2021.

Information Display and Sunlight Module business is a new type of information display And the information display and solar module businesses show weak performance and that was because the investment in the private and public sectors were contracted

and also the face-to-face sales activities that is required for B2B considering its nature were also restricted due to impact of COVID-19. However, we are seeing recovery of investment both in the private and public sector and the renewable energy policies started to show their impact. So because of this, we will see recovery of the market.

From the perspective of the market demand, we cautiously predict that the demand for information display will show a gradual recovery starting from the second half of this year.

Next question, please. The next question will be presented by Kang Ho-bak from Daesin Securities. Please go ahead with your question.

Elec S & Gdr 144A Elec S & Gdr 144A First of all, congratulations on achieving great performance and results despite difficulties of last year.

I have one question for mobile business. It has been reported that LG Electronics is looking into the mobile business trying to reshuffle the organization to decide the operational direction of the whole business considering the future competitiveness. This is increasing uncertainty in the market in the short-term perspective. So could you give us some comments on your ideas and plans? What are the directions that you are considering right at this moment? And when will the market hear from you regarding the decision?

Let me answer your question. As announced last week in our media report, MC Business is currently

looking into the current and future competitiveness of the business in a very objective manner. All of the possible options are being considered.

Currently,

The top priority is given to the job security of our members, and we are working really hard to find the optimal choice, considering diverse aspects such as resource management, possible synergy with our future strategies, and financial aspects.

Currently, we are looking at all possibilities and reviewing the short-term business direction.

Currently, all possibilities are being considered regarding the future direction of the business and nothing has been finalized. Also, we can't say for sure when the decision will be reached. We will communicate with speed and transparency once the decision is reached.

Next question, please. The next question will be presented by Dongjae Woo from Bank of America. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. Recently, the most interest of investors is related to the car parts, the VS business department. Especially, it is related to Magner and Hapjaksa. First of all, as you calculated 2020, the VS business department had a sales of 5.8 trillion won. Among them, the business department at the center of the drive parts that are replaced by JB Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A

I have my first question regarding VS. I believe that most of the investors will have the most interest in VS, especially the joint venture with Magna. You said that VS sales for 2020 was 5.8 trillion won. and I think, I guess that the IPGM will be transferred to the newly established JV and that will account for around 5-6% which can be translated into 200-500 billion KRW out of 5.8 trillion total revenues and you also explained that the electric vehicle component is likely to reach 30% of growth per annum And of course, then I can expect more than 30% of growth for the JV. And in order to achieve this target, then I think that you needed to already secure a lot of backlog in advance because thinking about the nature of the electric vehicle component, you need to prepare in advance, especially several years before you begin the business. So I'm wondering how the JV is going to make contribution to increase your sales and increase specialty intake. And from when do you expect the sales of the JV will be created? I think at least for one to two years after the establishment, you need to begin the preparation and spend the time for the preparation. And until the time when you get certified by the OEM and receive the order from the OEM and make your component get supplied, Then there will be many hurdles that will await you. So what will be your competitiveness, which can contribute to creating synergy and increasing your sales volume?

Yes, I will answer the question. As you said, the sales of JV company in 20 years is almost the same as the sales of JV company in 2300 years.

I will take your question for V.S. In terms of our sales of V.S. business in 2020, the proportion related to the JV will be around 230 billion Korean won.

And I will answer the second question. I mentioned earlier that the average growth rate of electric parts is more than 30%. Among the 30% I mentioned, If I take your second part of the question, yes, I've explained that the EV component is going to reach 30% of growth per annum.

And that includes, I'd like to say, not only IPMG, Integrated Power Generating Module, but also battery pack and HVAC components.

If I only specify the annual growth of

IPGM, we are expecting around 50% of growth per year.

And until the year 2022 and 2023,

The 50% that I explained will be created with the current backlog that we gained through our backlog. Regarding your point related to the additional or synergy effect with Magna as the joint venture will be established this year, we are going to begin our sales activity starting from the next year and we expect that the sales to be created from 2023 and 2024 at the earliest.

The additional sales which will be created with the joint venture is likely and expected to take up 10% of our entire sales in 2024.

That brings us to the end of LG Electronics' earnings release conference call for the fourth quarter of 2020. For further questions, please contact IR team. Thank you.