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 2021. 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 one on your telephone. I would now like to hand the conference over to the first speaker. Good afternoon. My name is Sangbo Shim from Investor Relations. Thank you for joining LG Electronics Earnings Release Conference Call for the fourth quarter of 2021. With me are representatives of each business management division, Mr. Lee Kwon Kim from Home Appliance and Air Solutions, Mr. Jung Ae Lee from Home Entertainment, Mr. Joo Young Kim from Vehicle Component Solutions, Mr. Chung Hyun Park from Business Solutions. We are also joined by Mr. Sang-ho Park from Global Business Management Group, Mr. Hyung-kyu Lee from Finance Division, and Mr. Hong-soo Lee from Accounting Division. Please note that all statements we will be making today regarding our financial results of the fourth quarter are subject to change in accordance with the result of the external audit. 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. Today I will outline the overall performance results of the fourth quarter of 2021 and the outlook for the year 2022 and the first quarter. After that, each division will take turns to deliver its business results and outlook. Now let me start with the consolidated financial results of the fourth quarter of 2021 and the outlook for 2022 and the first quarter. Consolidated sales of the fourth quarter was $21 trillion won and operating profit was $677.7 billion won. Sales grew 21% year-on-year, driven by growth in overseas markets for HNA and increased sales of OLED TVs in HE. Though affected by rising raw material and logistics costs, we recorded sound performance in operating profit by shifting our revenue structure to focus on premium products. I will now briefly review the fourth quarter performance of each business. H&A recorded $6.5 trillion won in sales, $157.1 billion won in operating profit, and 2.4% in profitability. H&G recorded $5 trillion won in sales, $162.7 billion won in operating profit, and 3.3% in profitability. BS recorded $1.7 trillion won in sales, and 53.6 billion won in operating loss. ES recorded 1.7 trillion won in sales and 35.1 billion won in operating loss. Each business will later share its respective business results and outlook in detail. Let's move on to the profit and loss and cash flow of the fourth quarter. In terms of profit and loss, Reflecting financial income and expense, equity method gain and loss, other non-operating income and expense, corporate income tax, and income and loss from discontinued operations, we posted 21.3 billion won in net income. Next on cash flow. Cash flow from operating activities of the fourth quarter was 441.7 billion won, and cash flow from investment activities was negative 391.8 billion won. As a result, net cash flow amounted to 18.8 billion won. and when reflecting cash flow from financial activities of negative 596 billion won, net change in cash decreased by 577.2 billion won. After reflecting changes in cash held for sale of 8.9 billion won, cash balance at the end of the fourth quarter came to stand at 6.1 trillion won. Next is the key financial position and indicators for the fourth quarter of 2021. As of the end of the fourth quarter, our assets stood at 53.5 trillion won, liability at 33.4 trillion won, and equity at 20.1 trillion won. In terms of leverage ratios, though there was a slight increase in net debt to equity, liability to equity and debt to equity all decreased quarter on quarter and year on year, and we continue to maintain a healthy financial condition. Next is the outlook for the year 2022 and the first quarter. In terms of the macro environment following last year, difficulties may persist as uncertainties remain with the spread of the COVID-19 variant, continued supply chain issue, and increase of raw material and logistics costs. Amidst this environment, we will strengthen business competitiveness by solidifying our position in the premium segment and focus our capabilities on responding to the external environment and cost structure risks. In line with this direction, we seek to continue generating stable profit together with revenue growth in 2022. We project our first quarter revenue excluding LG Indotech to grow year on year and expect a stable level of profitability on the back of revenue growth centered around premium products. We will move on to the fourth quarter results and outlook by business, but Before that, as disclosed on July 29, 2021, in adjusting our business portfolio, the CEM business was transferred from BS to LG Chem as of November 1, 2021. Now the business results and outlook, starting with H&A. Let me share the fourth quarter results of H&A. Sales stood at 6.5 trillion won with an 18% increase year-on-year driven by growth in overseas markets such as North America. Despite the upside of revenue growth and marketing cost savings, operating profit decreased year on year due to increased raw material prices and logistics cost hikes. Next is the outlook for the year 2022 and the first quarter. The global demand growth is projected to slow down and uncertainties and risks related to business operations are expected to persist as increased logistics and other cost burdens remain due to the imbalance in supply and demand. Amidst this environment, we will continue efforts to enhance sales armed with our product competitiveness and will focus our capabilities to secure stable profitability by increasing selling price and optimizing costs. For the first quarter, we believe the impact from increased logistics costs will persist, but we plan to maintain solid profitability based on continued revenue growth in overseas markets.

I will share the fourth quarter results of HE.

Sales grew year-on-year despite the decrease of global TV demand thanks to expanded product sales of OLED TVs. Though marketing costs increased due to intensified competition, we maintained sound profitability stemming from improved product mix focusing on premium products. Now let me share the outlook for a full year 2022 and the first quarter. In the market, global TV demand is projected to decrease slightly year-on-year as people spend less time at home, but we expect demand for premium products such as OLED TVs to be maintained. Accordingly, we will pursue continuous revenue growth and sound profitability by strengthening our market position in the premium product segment with increased sales of OLED TVs. For the first quarter, Marketing cost is expected to rise with fiercer competition in the global TV market, but we will secure solid profitability through revenue growth.