Lg Elec S/Gdr 144A

Good afternoon.

My name is Sang Bo Shim from Investor Relations. Thank you for joining LD Electronics Earnings Release Conference Call for the first quarter of 2023. With me are representatives of each business management division, Mr. Lee Kwon Kim from Home Appliance and Air Solutions, Mr. Chung Hee Lee from Home Entertainment, Mr. Ju Young Kim from Vehicle Component Solutions, Mr. Dong Chol Lee from Business Solutions. We are also joined by Mr. Sang Ho Park from Global Business Management Group, Mr. Chung Hyun Park from Corporate Business Management Division, Mr. Hyungkyu Lee from Finance Division and Mr. Hongsoo Lee from Accounting Division. Please note that all statements we will be making today regarding the financial results of the first 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 first quarter of 2023 and the outlook for the second quarter. Then each division will take turns to deliver its business results and outlook. After that, I will share our ESG activities and achievements. Now, let me start with the consolidated financial results of the first quarter of 2023 and the outlook for the second quarter. Consolidated sales of the first quarter was 20.4 trillion won and operating profit was 1.5 trillion won. Q1 revenue decreased year-on-year due to slow global demand in TV and IT stemming from weakened consumer sentiment. However, we are successfully improving our business portfolio through qualitative growth on the back of significant expansion in B2B businesses such as vehicle components and system air conditioners and continued revenue increase from non-hardware business. Despite the impact from sluggish sales, stable profitability was recorded across all businesses thanks to enhanced operation efficiency secured through cost structure improvement and efficient spending and efforts to reduce expenses, including logistics costs. I will now briefly review the first quarter performance of each business. H&A recorded $8.1 trillion in sales, $1.1 trillion in operating profit, and 12.7% in profitability. AG recorded 3.4 trillion won in sales, 200.3 billion won in operating profit, and 6% in profitability. BS recorded 2.4 trillion won in sales, 54 billion won in operating profit, and 2.3% in profitability. BS recorded 1.5 trillion won in sales, 65.7 billion won in operating profit, and 4.4% in profitability. 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 first 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 546.5 billion won in net income. on cash flow. Q1 cash flow from operating activities was 1.1 trillion won, and cash flow from investment activities was negative 1.6 trillion won, resulting in net cash flow of negative 409.4 billion won. When reflecting cash flow from financial activities of 898 billion won, cash balance at the end of Q1 came to stand at 6.8 trillion won, a 488.6 billion won increase from the previous quarter. Next is the key financial position and indicators for the first quarter of 2023. As of the end of the first quarter, assets did at 57.5 trillion won, liability at 34.1 trillion won, and equity at 23.4 trillion won. In terms of leverage ratios, regarding liability to equity, debt to equity, and net debt to equity, we are maintaining a healthy financial condition. Now the outlook for the second quarter. In terms of the business environment, uncertainties are mounting in the market triggered by geopolitical risks such as the U.S.-Chinese relations and Russia-Ukraine conflict, concerns of an economic downturn due to continued interest rate hikes, and instability of the financial system prompted by monetary tightening. We will accelerate the transition to a business structure for sustainable growth by diversifying our business portfolio and create sound profitability through preemptive risk management and efficient spending. We expect to grow the top line year-on-year in Q2 by actively responding to air conditioner demand in the peak season and securing steep growth in vehicle component sales. We expect operating profit to increase year-on-year on the back of revenue growth and stable profitability across all businesses. Now let's move on to the first quarter results and second quarter outlook by business. We will start with H&A. Let me share the first quarter results of H&A. Revenue recorded a slight growth year-on-year as we applied differentiated distribution strategies and expanded the B2B business despite weakening demand for appliances caused by deteriorating economic conditions. Operating profit increased significantly year-on-year despite increased marketing spending entailed to address competition in the market on the back of reduced expenses, including logistics costs, together with active efforts to improve the cost structure. Next is the outlook for Q2. Demand for appliances is expected to decline as consumption continues to shrink due to concerns of an economic downturn. subsequently leading to further intensified competition in the market. Amid this environment, we will continue to achieve top-line growth in B2B with eco-friendly, energy-efficient air solutions and proactively respond to shifts in demand by launching price-competitive strategic models in the volume zone to maintain our position in the market. We plan to secure stable profitability through stringent cost measures such as obtaining stable raw material prices and reducing fixed costs, and enhanced efficiency in spending, including marketing expenses.

I will share the first quarter results of HE.