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.