Lg Elec S/Gdr 144A

Good afternoon. My name is Sangbo Shim from Investor Relations. Thank you for joining LG Electronics Earnings Release Conference Call for the third quarter of 2022. With me are representatives of each business management division, Mr. Lee Kwon Kim from Home Appliance and Air Solutions, Mr. Jung Lee 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-gyu Lee from Finance Division, and Mr. Hong-soo Lee from Accounting Division. Please note that all statements we'll be making today regarding the financial results of the third quarter are subject to change in accordance with the result 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. Today I will outline the overall performance results of the third quarter of 2022 and the outlook for the fourth 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 third quarter of 2022 and the outlook for the fourth quarter. Consolidated sales of the third quarter was 21.2 trillion won and operating profit was 746.6 billion won. Despite declining consumer sentiment due to intensified inflationary pressures and impact from weak demand for durable goods, sales grew year on year on the back of increased product sales centered around B2B and new appliances and significant top-line growth in vehicle components. Though profit decreased for appliance and TV due to rising marketing costs in response to intensified competition brought on by slowing demand, Operating profit grew year on year thanks to the vehicle component business maintaining profitability. I will now briefly review the third quarter performance of each business. H&A recorded 7.5 trillion won in sales, 228.3 billion won in operating profit, and 3.1% in profitability. H&E recorded 3.7 trillion won in sales and 55.4 billion won in operating loss. BS recorded 2.3 trillion won in sales, 96.1 billion won in operating profit, and 4.1% in profitability. BS recorded 1.4 trillion won in sales and 14.4 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 third 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 $336.5 billion in net income. Next, on cash flow. Q3 cash flow from operating activities was $998.9 billion, and cash flow from investment activities was negative $835.6 billion. resulting in net cash flow of 437.7 billion won. When reflecting cash flow from financial activities of 647.1 billion won, cash balance at the end of Q3 came to stand at 7.6 trillion won, a 1.1 trillion won increase from the previous quarter. Next is the key financial position and indicators for the third quarter of 2022. As of the end of the third quarter, assets stood at 61.3 trillion won, liability at $36.4 trillion won and equity at $24.9 trillion won. In terms of leverage ratios, regarding liability to equity, debt to equity, and net debt to equity, we continue to maintain a healthy financial condition. Now, the outlook for the fourth quarter. In terms of the business environment, there are rising concerns of a possible global economic recession stemming from declining consumer sentiment due to inflation and interest rate hikes the persisting Russia-Ukraine conflict, energy crisis in Europe, and economic slowdown. Amid this environment, we will secure growth momentum by adopting new business models including software platforms and prepare for potential risk in business operations by adjusting channel inventory and boosting operation efficiency. Our fourth quarter revenue is projected to maintain growth momentum year-on-year on the back of top-line growth in appliances and vehicle components, We will strengthen efforts to secure profitability through preemptive risk management. Now let's move on to the third quarter results and fourth quarter outlook by business. We will start with H&A. Let me share the third quarter results of H&A. We recorded sales of 7.5 trillion won, up 6% year on year, led by a turnaround to growth in Korea, and continued growth in overseas markets. Though enhanced revenue acted as an upside factor for profitability, operating profit decreased year-on-year due to rising logistics cost burdens and costs entailed by intense market competition. Next is the outlook for the fourth quarter. Appliance demand is expected to weaken further, and subsequently, competition to secure the upper hand in the market is expected to intensify. Amid this environment, along with efforts for top-line growth by expanding presence in the volume zone, we will seek to secure profitability by increasing selling prices, especially for premium products, improving cost structures, and taking cost reduction measures. I will share the third quarter results of HE. Sales declined year on year. impacted by the decrease in global TV demand and weakened consumer sentiment in Europe due to the prolonged Russia-Ukraine conflict. Despite improved material cost thanks to panel price drops, operating profit decreased year-on-year due to declining revenue and increased marketing spending to address intensifying competition. Now let me share the outlook for the fourth quarter. In the market, amid persistent risk of a global recession due to inflation and energy supply disruption, competition in the market is projected to further intensify because of weak demand. Accordingly, we will secure a competitive position in the market by expanding sales of premium products such as OLED TVs and make efforts to secure profitability through sound management of channel inventory and efficient marketing spending. Let me share the third quarter results of VS. Sales grew year on year to stand at 2.3 trillion won thanks to OEM production increases following easing of the chip shortage and effective supply chain management. We continue to be profitable on the back of revenue growth and ongoing improvements in cost structure. Next, the outlook for the fourth quarter. Amid continued easing of the semiconductor shortage and normalization of OEM productions, macroeconomic risks also continue to exist in the market, such as weak consumer sentiment attributable to inflation. Through collaboration with automotive OEMs and component suppliers, we will actively respond to rising demand Moreover, we will reinforce global supply chain management and continuously improve cost structure to maintain top-line growth and profitability. I will share the third quarter results of BS. Q3 sales increased year-on-year led by recovering demand in the B2B market, including information display, but decreased against the previous quarter, impacted by slowing demand in IT. Operating profit decreased year-on-year because of rising marketing costs attributable to weak demand and intensified competition and increased cost burden brought on by the strong dollar. Now let me share the outlook for the fourth quarter. IT demand is expected to decline centered around advanced markets such as North America and Europe as the risk of a global economic slowdown remains. That said, the B2B market, namely information display, is projected to continue on a growth trajectory. We will continue to actively secure new B2B projects centered on hotel TVs and digital signage that also drive efficiency in operations with regard to inventory and resource management in preparation for worsening market conditions. That brings us to the end of the third quarter earnings release and outlook for the fourth quarter. We will now take questions.

Operator, please commence with the Q&A session. The first question will be presented by Dongjae Woo from Bank of America.

Hello. I have two questions. First, as you all know, the global macro environment is becoming more and more confusing and difficult. has shown good results over the past three years, and the uphang was also very good. If we review the past three years, the current management will see this macro change as a risk, for example, whether it is more serious than the Liman incident in the past, or whether it can reach the level of real IMF. So, although it is very difficult to diagnose this kind of market economy, Elec S & Gdr 144A Elec S & Gdr 144A It would be meaningful to listen to the strategy based on this. Secondly, it is an H&A business, but it seems to be very good to continue to make profits even in this difficult situation. In the short term, if we randomly check the distribution channels, whether it is Korea or the United States, there seems to be a lot of stock. The risk of sell-through is increasing as much as it is. Depending on that, Thank you for taking my question. I have two questions. My first question is about corporate wide operation.

As everybody is aware of, the global economy is witnessing various macro issues, and we are under a big confusion at the moment. Even though we have enjoyed good performance and market situation during the past three years, I believe that big changes will come right ahead. I would like to ask how big you think the risks are at the moment. For example, do you believe the current situation is as serious as the situation that we witnessed during the Riemann Brothers crisis or the foreign exchange crisis back in the history? And when do you think we can overcome such situation? And when will we be able to see some recovery in revenue and sales in home appliances and TVs? I know that this is very difficult to make projections. However, I would like to ask for your thoughts of this week. And my second question is about home appliances. I believe that the current situation is very difficult, but still you are seeing profit at the moment. But taking a look at the short term, Thank you for your question.

There are many factors that affect the economy, so it is difficult to talk about the depth of the economy at the moment, but one thing is for sure. As I said before, the Russian-Ukrainian situation is getting longer and the global inflation is getting worse, and this has a lot of influence on consumer psychology.

Thank you for your question. First, you have asked about the economic recession that we are witnessing, and there are various factors, I know. And I know it is very difficult to determine the depth and elaborate on furthermore. However, what I can say for sure is that as I have covered in my presentation, We predict the uncertainty in the business environment to continue for now due to the prolonged conflict between Russia and Ukraine and worsened consumer sentiment stemming from deepened global inflation.

And you also talked about the turnaround of the home appliances and the TV market. First of all, let me talk about home appliances. We have premium home appliances that maintain strong demand. And to further answer your question about the current status of home appliances TVs,

I would like to tell you more starting from home appliances. We have strong position in the premium market and premium appliances and based on our superior market strength, we would like to further strengthen our position in the market. And also we are seeing recovery in the vehicle component business and we would like to further continue such momentum.

To elaborate more on profitability, our plan is to ease cost burden by raising our selling price of the premium lineup.

Also, as mentioned, we will continue devoting efforts to secure profitability through enhancing cost structure and taking proactive risk management measures. Lastly, as you have been witness throughout the media, our plan is to focus on securing additional profit-making models with great growth potential such as expanding advertisement and content business based on software platform. Thank you.

Yes, I will give an answer to H&A. Regarding the management of H&A headquarters, To the second part of your question on H&A, we're currently maintaining an appropriate inventory level as we check by section

for our own inventory and channel inventory. And by identifying demand slowdown or uncertainty in advance, we factor all the potential risks into our sales plan, we said. Additionally, we also proactively manage our PSI, which supports our revenues.

Yes, as you said, looking at the stock level at the end of September, the overall stock level is slightly higher in terms of future sales, but the distribution stock level Yes, it's true. The overall inventory amount is a bit considerable. However, it's normal that we normally have about 5 trillion won of channel inventory.

As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years.

As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory when compared to previous years. As of the end of September, we have also managed a sound level of channel inventory On our future inventory operation strategy to respond to the pandemic-to-pandemic shift in combination with demand declines driven by the global economic crisis,

We're going to establish quarterly goals to efficiently operate our resources by way of ensuring sound inventory levels in conjunction with sophisticated inventory management and minimum inefficient inventory based on our past experience, and flexibly operating our own inventory, thereby differentiating for each region and product to support business strategies. Thank you.

Next question, please.

The next question will be presented by Dongwon Kim from KB Securities.

Thank you for taking my questions. I have two questions and my first one is about home entertainment.

Due to the slowdown in TV market demand, it is expected for retailers to adjust inventory level and display companies to lower its production volume. What are your plans to respond to such circumstances? And my second question is about business solutions. What is the business portfolio strategy of the BS company after exiting the solar panel business?

Yes, I will answer from HE. As you already know from the second quarter, the demand for global TV market has decreased, and the supply of TV manufacturers and distribution companies has increased. In addition, the party has also been making efforts to minimize the risk of distribution stock by adjusting the output volume from the first quarter, and from the current standard at the end of September, distribution stock and private stock

I would like to answer your question about home entertainment. As you have seen from the second quarter of this year, due to the global TV market demand drop, TV manufacturers and retailers have seen an increase in their inventory level. The company has also put an effort to minimize channel inventory risk by adjusting the shipment levels from the first quarter. And as of late September, our inventory level remains relatively sound, YOY. However, at a time when panel supply is exceeding demand due to a slowdown in demand, it is expected for display companies to adjust their shipment volume in order to prevent additional price dip and to protect their profitability.

However, it is expected that the current state of supply will continue for the time being because the adjustment of the LCD panel production cap is not yet in full swing. However, the oversupply in panels will continue for a while unless the overall industry adjusts the LCD production capacity.

Therefore, we would like to optimize the inventory level and panel supply through precise demand forecasting, and we are currently making actions. Thank you.

Yes, we will answer your questions. First of all, our department has a portfolio of IT projects centered on monitors and PCs, information display projects such as commercial displays and hotel TVs, and commercial robot projects.

I would like to answer your question about business solutions. BS Company's business portfolio consists of information technology, including monitors and PCs, information display, like commercial display and hotel TVs, together with commercial robot business.

Our department is currently implementing a business strategy to focus on B2B vertical solution projects.

Our business strategy that is being implemented focuses on nurturing B2B solution business from the IT business sector. In addition, the company would like to continue expanding our solution business that provides products and services to customers in each vertical by developing robots and EV charging business as part of the new portfolio.

And the IT business continues to provide products that meet the needs of the high-end market, focusing on gaming monitors and gram laptops, which are strong in their own business. Based on the existing capabilities secured in the B2C field,

In terms of IT business, LG Electronics would like to continuously provide products that satisfy the high-end market needs with our outstanding gaming monitors and gram laptops. And also, we would like to expand our capability from our strong B2C to B2B area. Thank you.

Next question, please. The next question will be presented by Jisan Kim from Kium Securities.

Thank you for your question. There are two questions. The first question is about H&A business. Due to inflation, consumer psychology has weakened and global household demand has decreased. On the other hand, the cost of raw materials and raw materials are increasing. Considering these factors, I would like to ask Thanks for taking my questions. It's a two-fold question on H&A and VS respectively.

First, on H&A, there have been improvements to logistics and raw material costs despite slowing global home appliance demand due to weak consumption sentiment led by inflation. Can you give us H&A Company's revenues and profitability guidance for Q4 and the 2023 year, given all that? And then secondly, what is your outlook on VS Company's revenues and profitability for Q4 and the 2023 year? Your Q3 profitability was better than expected. Do you think you could continue to secure and improve profitability?

Yes, I will answer H&A's question. The price of raw materials and raw materials in the second half of this year is going down compared to the first half of this year. The price of raw materials is still a bit of a burden compared to last year. Let me start with the first part on H&A. Although logistics and raw material costs have fallen in the back half of the year relative to the first half, raw material costs are still a burden when compared to the previous year.

Additionally, logistics costs seem unlikely to fall by year-ends when we are to renew our contracts, since we have usually done long-term contracts.

In the case of the 4th quarter and the 23rd year, in the case of the 4th quarter, due to the recent decline in demand, even though it is the maturity period, the growth rate is a bit limited. If the marketing costs increase due to competition, is expected to have some influence on profitability improvement.

Looking at over Q4 and next year, if the recent sluggish demand leads to limiting revenue expansions during Q4, the peak season, and competition ramps up marketing cost, it's likely to present headwinds to our profitability.

However, in 2023, the rescheduling of logistics will be in full effect, However, when the effect of renewed contracts materializes in 2023,

and our cost competitiveness improves like further drops of raw material cost, and as we increase premium product ASP and target the volume zone to achieve solid revenue growth, we expect to further improve our profitability of the appliance business. Thank you.

Yes, I will answer the question from the VAS department. Despite the high price of some parts in the complete vehicle OEM parts collection issue, the third quarter of the second quarter, Let me answer your question on VES. We have had positive profits in Q3 following Q2 despite component supply issues for OENs and some component cost increases.

For Q4 as well, we aim to achieve, we aim to have positive operating profit margins as we continue to improve profitability. So in Q4, we'll continuously drive a high growth of revenues and achieve positive operating profit margins.

23년에도 자동차 부품 수요 증가, 신규 프로젝트의 본격 양산에 힘입어 높은 매출 성장이 예상되며, 매출 상승 효과 및 비용 개선 활동을 통해 수익 확보도 지속하고자 합니다.

Going into 2023, by further improving cost factors and achieving high revenues, in addition to rising vehicle component demand and mass production kicking off for new projects, we expect to be on track to secure profits. Thank you.

Next question, please.

The next question will be presented by Kangho Park from Daesin Securities.

Yes, thank you for the question. I have two questions for you, H&A and VAS. First, it's about H&A. Even in 2023, there is a long-term concern about the return of the economy. In that context, we are worried about the decline in the sale of home appliances. Elec S & Gdr 144A

Thanks for taking my questions. I have two questions on H&A and VS respectively. First on H&A, now there are concerns over the home appliance business. Are you going to continue to increase prices of premium appliances into 2023 as well? And can you please elaborate on the backgrounds of your increasing ASP well into 2023? And then secondly, how do you see the revenue proportion trends per region and customer You have seen great revenue, high revenues in Q3 as well. If possible, can you please elaborate on it?

Yes, I would like to talk about the price impact of H&A. Despite the overall demand decrease, the demand for high-end premium products is seen to remain stable. Even in 2023, the demand for premium products will remain stable

Let me take the first part of H&A's pricing strategy. As the demand for high-end premium products is solid, despite declining demand trends, we are to continue our strategy in expanding premium products with lower demand volatility well into 2023.

While scaling up the premium appliance segment where we have a competitive edge, we expect to continuously roll out new products with new technology mounted

to lead the market and further ramp up our own premium strategy going forward. As for pricing strategy, we always calculate spendworthiness figures, considering diverse factors, including markets, demands, and inventory. And we plan to continuously increase ASP of products, especially premium ones, within proper ranges, given what's happening in the market.

However, new designs or features may be applied in the selection of products with higher prices, In regards to what products in what regions will increase the ASP, we will consider spendworthiness when setting prices of newly launched products with new or upgraded features or designs as we always do.

Let me answer your question on VES. VES Company does business with various global OEMs.

North America and Europe take up over 60% of the total infotainment revenues, and we have also worked to expand the size of the business with Korean and Japanese companies. While NA customers still take up a large share of the total in the EV components business, with the inception of the LG Magna EPT, we expect orders and revenues from European OEMs to expand. Thank you.

Next question, please.

The next question will be presented by Sungryul Kwon from DV Financial Investments.

I would like to ask two questions. I think HA will have a lot of influence on European market demand. In the second half of this year, this year, or if possible next year, I am curious about the future of OLED TV sales. I would like you to answer. I have two questions. My first question is about home entertainment.

At a time when we are witnessing an increase in market demand, I believe that your company may have great impact. So I would like to ask the Ola TV sales quantity of the second half of this year and the entire year 2022, and if possible, the figures for 2023 together. My second question is to corporate wide operations. I believe that liquidity is found in the market and cash managing is very important. So under such circumstances, do you have any changes in the overall capex compared to the plan established earlier this year? And it would be also very appreciated if you can share the mid- to long-term investment plan of each business.

Yes, I will answer the question. I would like to answer your question about home entertainment.

In the third quarter, yes, but in the fourth quarter, there is a threat to the purchasing power due to the global economy, but there is also a threat to the World Cup special opportunities, Well, the demand drop was what we have witnessed by the third quarter of this year. And if I may elaborate furthermore on the demand of the peak season in the fourth quarter, there are some risk factors that may bring down purchasing power due to various global economic issues. There are also opportunities such as the World Cup at the same time. Therefore, we believe that we will be able to see some recovery in major distribution channels through marketing and promotions.

Especially, the OLED TV market is based on OLED TV success experience based on OLED TV success based on OLED TV success based on OLED TV success based on OLED TV success based on OLED TV success based on OLED TV success Black Friday sales growth is expected.

Especially just as the sales success that we had witnessed in major channels in the fourth quarter of last year, we are expecting sales growth especially in OLED TVs led by the World Cup and Black Friday promotions.

Speaking of European TV market demand, Elec S & Gdr 144A

In terms of the European TV market especially, we have seen negative growth in demand until August with a 7% drop in sales volume due to macroeconomic issues including geopolitical risk in Russia and Ukraine, weak euro, and inflation. However, we are expecting sales quantity to grow by approximately 5% in the fourth quarter with our aggressive sales plans per channels coupled with peak sales season, and we are being well prepared for this.

This year and next year, in the second half of this year, JASA will focus on new models, especially E-ZEL, Well, this is the case in this year and next year altogether.

preparing to bring new models to the market, especially we are planning to bring lifestyle screens such as Easel, POSE, Flex to the market this year so that we can see a slight increase in the market sales in the second half of this year together with next year. Thank you.

Yes, I will answer your question regarding CapEx. First, from the perspective of CapEx investment, I would like to answer your question in regards to CAPEX investment.

The company's investment in capital expenditure this year will be made without witnessing big changes compared to the plan established earlier this year, following principle to invest within the EBITDA amount.

And if I may elaborate on each business's mid- to long-term investment plan,

The company is investing in expanding existing businesses, advancing and intellectualizing the manufacturing sector, and realizing digital transformation. As a result, we will continue to make the best practice such as Lighthouse Factory in Changwon.

However, the investment in high-end and innovative business portfolios has been strengthened, and we will continue to invest as much as possible Together with making investment that can advance our business portfolio and discover new business sector,

We would like to put in our best efforts in minimizing unnecessary investments and making investment more efficient so that the company can respond to global economic recession and slow down in demand and eventually can well manage the financial soundness.

Next question please.

The next question will be presented by Sung Kyu Kim from Daiwa Capital Market.

Yes, hello. Thank you for the question. I have two questions. One is for the vehicle component solution and the other is for the business solution. Regarding VS, you achieved very good performance in the third quarter. Q. Currently, I am curious about the total and major businesses of the BS division, including IMPERTAINMENT, LG MAGNA, and GKW. Q. I would like to know what the business ratio is in 2020 and what is expected at the end of the year. B2B demand. In the current competitive situation, I expect B2B demand to be relatively strong in comparison with consumer B2C demand. I would appreciate it if you could tell us what the actual demand situation is and what the prospects are for our business performance.

Thanks for taking my questions. I have two questions on VES Vehicle Components Solution Company and VES, respectively. First, on VES, your Q3 performance was pretty great. Can you give us more color on backlogs across the VES company and for each of the main businesses, namely infotainment, LG Magna, EPT, and ZKW? And by end of year 2022, how do you expect your backlogs and proportions of each main business? And the other thing is around B2B demands. I believe the company's B2B demand can remain strong compared to that of B2C amid economic slowdown. How do you see the demand trends?

Yes, I will answer your question. Let me start with the first part on VEF. Our backlogs were initially expected to be around 65 trillion won, but we now expect to have over

80 trillion won towards the end of the year, supported by new orders and exchange rate effects and so on in Q3 to Q4.

In the current standard, the total number of products in the V.S. headquarters is about 60% of the total number of import products, and the rest of the electric vehicle parts are about 20% of the total number of electric vehicle parts. The high growth rate of the electric vehicle market and the power of the LG Magnum JV effect

As of now, infotainment takes up around 60% of the total backlogs, EV components, mid-20%, and automotive lamp, the rest. On the back of the high growth of the EV markets and LG Magnus JV joint venture effects, we expect the EV component business to take up a larger share of backlog in the future.

Thank you.

I would like to answer your question about business solutions. And as you just covered, the overall B2B demand remains relatively stable compared to B2C.

We have witnessed higher demand in the first half of this year as governments and corporates started to make actual investments that were postponed and downsized during the pandemic. In the second half of this year, we witnessed higher demand in the first half of this year as governments and corporates started to make actual investments that were postponed and downsized during the pandemic.

In the second half of this year, we witnessed higher demand in the first half of this year as governments and corporates started to make actual investments that were postponed and downsized during the pandemic. In the second half of this year, we witnessed higher demand in the first half of this year as governments and corporates started to make actual investments that were postponed and downsized during the pandemic. In the second half of this year, we witnessed higher demand in the first half of this year as governments and corporates started to make actual investments that were postponed and downsized during the pandemic. In the second half of this year, we witnessed higher demand in the first half of this year as governments and corporates started to make actual investments that were postponed and downsized during

Starting from the second half, the global economic recession became worsened. Hence, demand of government and corporate vertical is not rising as expected. However, hospitality, including hotels and education vertical demand, are showing relatively strong growth.

In summary, the B2B demand outlook has decreased slightly compared to the past, but overall, demand growth is expected to remain.

In a nutshell, the overall demand outlook of B2B has decreased compared to our forecast estimate. However, the overall demand will be on the rise.

And lastly, you asked about the company's outlook. B2B's business performance is expected to increase sales based on a strong demand, so we expect to maintain profitability firmly.

And lastly, adding more about the company's outlook, the B2B performance is remaining sound based on the sound demand, and we are expecting high revenues. Therefore, I can say that the profitability is remaining sound at the moment. Thank you.

Next question, please.

The next question will be presented by Jung Joon Park from JP Morgan.

Yes, there are two questions. The first is, if you can quantify how much profit and sales you are experiencing under the dollar-striking environment. I have two questions. My first question is about corporate-wide operations. Currently, the dollar is remaining strong compared to the Korean won, and how does this impact your sales and COI?

My second question is about home entertainment. You mentioned that TV sales will go up by 5% in the fourth quarter. Do you think this is because of the World Cup effect, or do you have any other reasons behind such growth?

Yes, I would like to talk about the effect of the exchange rate. The company's portfolio is running stably, and we are working hard to make sure that the exchange rate I would like to answer your question about the exchange rate.

The company is running stable regional portfolio operations. In addition, we are taking natural hedging methods such as currency matching in order to mitigate exchange risk despite foreign exchange rate fluctuation. As per, we are well striking the balance between foreign currency assets and liability. Therefore, the foreign exchange rate fluctuation has very limited impact on the corporate wide performance. Thank you.

Yes, I would like to speak at the H headquarters. Regarding the World Cup specials that you mentioned a while ago, I think that there is an additional demand improvement effect with the maturity of the fourth quarter. However, we are judging that the size is a little more limited compared to the past level. If you look at it regionally, especially in Brazil, the government is focusing on the growth market, Economic Stimulus Package, etc. will be implemented, and the TV sales will increase during the World Cup, so I think it will have a positive impact. Also, since the World Cup was held in the Central Asian region for the first time, interest in the region is increasing, so I am looking forward to additional demand in the Central Asian region. Lastly, it's Europe. As I said earlier, 5% of Europe is just Elec S & Gdr 144A

I would like to answer your question about home entertainment. As you have mentioned, we are expecting World Cup effect, and the figure that I have mentioned, 5%, is mentioned by the market analysis ahead from the peak. And I believe that we will be able to see additional enhancement in the fourth quarter along with the peak season. And we believe that this of increase will be limited compared to past levels. And if I may move on to the regional sales, taking a look at the developing market, the Brazilian government is planning to implement an economic stimulus package that can bring positive breeze to TV sales during the World Cup. And the company is also expecting higher demand in Middle East Asia market. Elec S & Gdr 144A We believe there will be additional demand as the World Cup is going to take place during the winter season and people may enjoy the event indoors and we are implementing marketing measures accordingly. Thank you. If there's no further question, this brings us to the end of LG Electronics Earnings Release Conference Call for the third quarter of 2022. For further questions, please contact the IR team. Thank you.