Lg Elec S/Gdr 144A

Good afternoon. My name is Seung-Yeon Kim from IR Communications. Thank you for joining LG Electronics Earnings Release Conference Call for the fourth quarter of 2023. With me are representatives of each business management division, Mr. Lee Kwon Kim from Home Appliance and Air Solutions, Mr. Jung-Hee Lee from Home Entertainment, Mr. Ju-Young Kim from Vehicle Component Solutions, Mr. Dong-Chul Lee from Business Solutions. We are also joined by Mr. Sangho Park from Global Business Management Group, Mr. Chung Hyun Park from Corporate Business Management Division, Mr. Hongsoo Lee from Accounting Division, and Mr. Youngkyun Kim from Finance Division. Please note that all statements we'll be making today regarding the 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 2023 and the outlook for the full year of 2024 and the first 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 fourth quarter of 2023 and the outlook for 2024 and the first quarter. Consolidated sales of the fourth quarter was 23.1 trillion won and operating profit was 313.1 billion won. Q4 revenue grew year-on-year on the back of stable growth in appliance and increased sales of electric vehicle components, though sluggish revenue continued in TV due to slowing demand from premium TVs. Operating profit recorded a loss due to increased marketing spending to address year-end peak season demand including Black Friday promotions and one-off costs such as year-end performance incentives. I will now briefly review the fourth quarter performance of each business. H&A recorded 6.7 trillion won in sales and 115.6 billion won in operating loss. AG recorded 4.2 trillion won in sales and 72.2 billion won in operating loss. GS recorded 2.6 trillion won in sales 5.7 billion won in operating profit and 0.2% in profitability. ES recorded 1.3 trillion won in sales and 89.5 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 negative 76.4 billion won in net income. Next on cash flow. Q4 cash flow from operating activities was 1.5 trillion won and cash flow from investment activities was negative 1.1 trillion won. Accordingly, net cash flow was 385.2 billion won. When reflecting cash flow from financial activities of negative 9.8 billion won, cash balance at the end of Q4 increased 375.4 billion won from the previous quarter to stand at 8.5 trillion won. Next is the key financial position and indicators for the fourth quarter of 2023. As of the end of the fourth quarter, assets stood at 60.2 trillion won, liability at 36.7 trillion won, and equity at 23.5 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 year 2024 and the first quarter. In terms of the business environment, there are expectations of a recovery in consumer sentiment attributable to slowing inflation and possible interest cuts in major regions like the US and Europe. But concerns regarding protracted geopolitical risks and bottlenecks in global maritime logistics also exist. We will continue to grow our top line in main businesses as well as enhance the business portfolio by expanding B2B and software platform businesses and maintain stable cost structures through fundamental cost improvements and efficient spending. We plan to strengthen business competitiveness by expanding investments in line with our strategic priorities. Accordingly, we seek to grow revenue in 2024 by responding nimbly to shifts in demand and driving stronger performance in B2B businesses such as vehicle components and HVAC. We will secure sound levels of profitability on an annual basis by maintaining stable cost structures through preemptive efforts. In the first quarter, we plan to reach revenue levels higher than that of the previous year on the back of a pickup in B2C sales and steep growth in vehicle components business. We aim to maintain stable levels of profitability through enhanced operation efficiency. Now let's move on to the fourth quarter results and outlook for 2024 and the first quarter by business. We will start with H&A. Let me share the fourth quarter results of H&A. Though recovery of demand in the global appliance market is delayed, Revenue increased year-on-year on the back of our strengthening of the two-track strategy to address the premium and volume zone segments and expansion in new business areas such as appliance subscription. Operating profit decreased year-on-year despite stable operations regarding material and logistics costs because of increased marketing spending to address intensified competition in the market and the impact from year-end performance incentives. Next is the outlook for 2024 and Q1. Marketing uncertainties and intense competition are expected to persist due to the sluggish global economy and unstable international situations. Amid this environment, we seek to secure top-line growth momentum through stronger drive of the volume zone in main B2C businesses, expanded proportion of B2Bs centered around HVAC, and accelerated efforts in online and subscription businesses. We will focus capabilities on creating stable profitability through efficient resource management and cost improvement efforts. In Q1, we will maintain revenue growth momentum compared to the previous year by expanding sales of volume zone products which have relatively sound demand. We plan to secure profitability levels similar to that of the previous year by improving manufacturing costs and optimizing marketing spending. I will share the fourth quarter results of HE. Though Q4 sales increased quarter on quarter as we entered the peak season, it declined year on year due to sluggish demand for premium TVs, including our flagship product, OLED TV. Despite the sales decrease and rising LCD panel prices, the level of operating loss was reduced year-on-year by enhancing efficiencies in resource management, including marketing spend. Now let me share the outlook for 2024 and the first quarter. In the market, there are uncertainties regarding recovery of consumer sentiment, but a gradual recovery in TV demand is expected. Accordingly, we aim to turn around to a growth trend in revenue and secure solid profitability by both focusing on operations centered on premium products and expanding the software platform business. In the first quarter, we expect revenue to grow year-on-year on the back of increased sales of OLED TVs, but profitability may decrease somewhat year-on-year due to the impact from rising costs of major materials, including LCD panels. Let me share the fourth quarter results of EF revenue grew year-on-year thanks to increased sales of electric vehicle components. Though there were factors temporarily pushing up costs including incentive payments, operating profit remained in the black thanks to revenue growth. Next, the outlook for 2024 and the first quarter. Despite concerns of stagnant demand for vehicles following the slowing growth in the global economy and impact from EV subsidy reduction in many countries, Demand for electric vehicles is projected to grow, especially in North America, on the back of recovery and spending power in the second half. Accordingly, for the year 2024 and Q1, we anticipate that top-line growth momentum will continue, driven by revenue realized from project launches of awarded business. We plan to manage operations flexibly in accordance with possible short-term dips in demand and continuously make efforts to improve profitability. I will share the fourth quarter results of BS, Sales grew by a small margin year-on-year thanks to demand recovery in information display, though demand was slow to recover in the global IT market. Operating profit decreased year-on-year with increased investments to accelerate future growth, including new business areas such as EV charging. Now, let me share the outlook for the year 2024 and the first quarter. Global IT demand is expected to recover, but fierce competition is expected to remain overall. We will pursue top-line growth based on our new lineup in Gaming Monitors and GramPro, and strengthen efforts to secure more projects, especially in the government and education verticals. We aim to secure profitability through efficient resource management. In Q1, we seek to expand revenue year-on-year by actively addressing the peak season for IT products in Korea. We plan to focus on enhancing operations through thorough inventory management and stringent spending. Last but not least, let me share our ESG activities and achievements. We are striving to give confidence to customers that they are using the most eco-friendly and convenient products and services just by choosing us. We are also seeking to enhance corporate value by minimizing ESG-related risks as well as becoming a company that customers and the market can trust the most. To provide more sustainable customer experiences, we have continuously strengthened the competitiveness of our eco-friendly products. Our products took up the top positions in all categories of the best large capacity washing machines in 2023, named by the U.S. Consumer Reports last year, and our products acquired the Green Choice mark for outstanding performance in energy efficiency. Moreover, we received recognition for our efforts to protect the environment and save energy by receiving the Energy Star from the U.S. Environment Protection Agency for the first time in the industry regarding seven induction cooktop and range models. Meanwhile, LG Electronics is placing emphasis on implementing ESG management through active collaboration with external partners. We have become a member of Glass Futures, a UK not-for-profit research and technology organization, and are exploring ways to produce glass in a sustainable manner together. These activities to continuously enhance our corporate value have also received much acknowledgement from the outside. LG Electronics was listed in the Dow Jones Sustainability World Index for 12 consecutive years last year. The DJSI World ranks the top 10% of global companies in terms of ESG management practices. LG Electronics was the sole South Korean company in the leisure equipment and consumer electronics industry to be included in the DJSI World Index for 12 years in a row. We also received an A rating for four and three consecutive years respectively from Morgan Stanley Capital International and Korea Institute of Corporate Governance and Sustainability. Going forward, we will preemptively identify ESG-related risks and opportunities to further achieve and advance ESG targets and vision. By doing so, we will ensure the long-term growth and stability of LG Electronics and maintain high levels of trust and a positive reputation among stakeholders. That brings us to the end of the fourth quarter earnings release and outlook for the year 2024 and the first quarter. We will now take questions. Operator, please commence with the Q&A session.

Now, Q&A session will begin. Please press star 1 if you have any questions. Questions will be taken according to the order you have pressed the star and 1. For cancellation, please press star and 2 on your phone. The first question will be provided by Kangho Park from Daesin Securities. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. I will ask two questions. The first is on the side of the military. This year, there is still high uncertainty in terms of macros and intelligence. In such a situation, please comment on whether there is a guidance for overall sales or sales profits in 2024. I would appreciate it if you could point out whether there is a point where we are particularly looking forward to growth among these guidance or, on the other hand, whether there is a point that is expected to be unforeseen. The second is H&A. Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A