Lg Elec S/Gdr 144A

Good morning and good afternoon. Thank you for joining ELSA Electronics Earnings Release Conference Call for the first quarter of 2024. 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 1 on your telephone. I would now like to hand the conference over to the first speaker. Good afternoon. I am Changtae Kim, CFO of ELSA Electronics. Thank you for joining LG Electronics Earnings Release Conference Call for the first quarter of 2024. As of CFO, I will be hosting the Earnings Release Conference Calls going forward to describe the current status and prospects of LG Electronics and listen to your comments attentively through active communication with the market. I am joined by Mr. Sang-ho Park from Global Business Management Group as well as representatives of each Business Management Division, Mr. Lee Kwon Kim from Home Appliance and Air Solution, Mr. Junghee Lee from Home Entertainment, Mr. Juyeon Kim from Vehicle Component Solutions, Mr. Dongchul Lee from Business Solutions. Also present are Mr. Chunghyun Park from Corporate Business Management Division, Mr. Hongsoo Lee from Accounting Division, Mr. Youngjun Kim from Finance Division, Ms. Soo Jung Chung from ESG Strategy Planning Team and Mr. Won Jae Park from Investor Relations Division. Now, Mr. Won Jae Park from IR will first present the order of events for the call today, our results in the first quarter, and outlook for the second quarter.

Good afternoon.

My name is Won Jae Park from Investor Relations. I will outline the overall performance results of the first quarter of 2024 and the outlook for the second quarter. Next, each division will take turns to deliver its business results and outlook. Then, Ms. Chung from ESG Strategy Planning will share our ESG activities and achievements, followed by the CFO's comments on the strategic direction for 2024. 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. Now, let's start with the consolidated financial results of the first quarter of 2024 and the outlook for the second quarter. Consolidated sales of the first quarter was 21.1 trillion won and operating profit was 1.3 trillion won. Q1 revenue grew year-on-year on the back of stable growth in appliance and TV and increased sales of vehicle components centered around EV components despite the slowing demand due to contracted consumer sentiment. in terms of operating profit, though marketing spending increased to address competition in the market and there was some impact from rising LCD panel prices, we recorded stable levels of profitability thanks to revenue growth effects and enhancements in our portfolio with more focus on high-profit businesses such as platform service. I will now briefly review the first quarter performance of each business. H&A recorded 8.6 trillion won in sales, 940.3 billion won in operating profit, and 10.9% in profitability. AG recorded 3.5 trillion won in sales, 132.2 billion won in operating profit, and 3.8% in profitability. VS recorded 2.7 trillion won in sales, 52 billion won in operating profit and 2% in profitability. ES recorded 1.6 trillion won in sales, 12.8 billion won in operating profit, and 0.8% 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 585.4 billion won in net income. Next on cash flow. Q1 cash flow from operating activities was negative 80.1 billion won and cash flow from investment activities was negative 1.5 trillion won. Accordingly, net cash flow was negative 1.53 trillion won. When reflecting cash flow from financial activities of 48.3 billion won, Cash balance at the end of Q1 decreased 1.48 trillion won from the previous quarter to stand at 7 trillion won. Next is the key financial position and indicators for the first quarter of 2024. As of the end of the first quarter, assets stood at 61.4 trillion won, liability at 36.9 trillion won, and equity at $24.5 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 second quarter.

A difficult business environment is expected to persist due to high interest rates maintained in major countries because of continued inflation, increasing uncertainties in international situations, and unstable oil prices stemming from fluctuations in crude oil supply. Amidst this environment, we will pursue qualitative growth by accelerating the shift in portfolio by innovating our business models, and we plan to deploy differentiated market strategies to flexibly respond to changes in demand. Accordingly, in Q2, we expect revenue to grow year-on-year through continued stable growth in appliance, active efforts to address demand recovery in TV, and solid sales in vehicle components. We believe profitability will improve year-on-year on the back of operating leverage effects, more contribution in operating profit from high-profit businesses, and cost structure stabilization. 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.

Though recovery of market demand is delayed due to the continued slowdown in the global economy, there are tangible signs of a gradual recovery in emerging markets amidst which revenue increased year on year on the back of our two-track strategy of launching differentiated products and expanding price coverage as well as expansion of new business areas including subscription and online businesses. Operating profit decreased year-on-year despite effects from revenue growth, material cost reduction, and logistics cost stabilization due to increased marketing spending to address competition in the market. Next is the outlook for Q2. The global demand for appliance is projected to show a gradual growth centered around emerging markets, but competition is expected to intensify with geopolitical instability in the international arena and delayed recovery of demand in advanced markets. Amid this environment, we seek to continue driving top-line growth momentum by proactively responding to changes in the market through growth in B2C with new models in main businesses and expansion of the volume zone, expanded B2B operations centered around HVAC, and strengthening of online and subscription businesses. We will improve operating profit year on year through efficient resource management and cost improvement efforts. In today's call, I would like to share our views on the annual demand prospects for the appliance market. By sharing our views on the appliance market, we seek to introduce where we think global demand is headed and enhance the market's understanding of our business strategy in addressing these changes in the market. I would like to state that this is an outlook on the combined market demand for refrigerators and washing machines and is not related to projections on our appliance revenue, which involves various factors such as market share and competitive environment by each region. Please note that the actual market situation may be different from this outlook due to various factors, including the macro environment. Overall, we expect a shift to gradual growth in the global appliance market in 2024. However, it may take some time for the sluggish consumer sentiment to recover completely, and so We believe demand pickup will be concentrated mostly in the second half in most regions with limited levels of improvement for the year. We are closely monitoring changes in the market environment by region based on our global sales network and are deploying various customized strategies for each region. Through this, we will not only proactively address potential opportunities and business risks, but also continuously secure stable business performance by maximizing efficiency in resource management.

I will share the first quarter results of HE.

Revenue increased year on year based on expansion of software platform business and top-line growth especially in Europe. Though operating profit turned around to secure stable levels of profitability, it decreased year on year due to cost pressures from rising LCD panel prices and increased marketing expenses to drive sales of premium products. Now let me share the outlook for the second quarter. In the market, there are uncertainties such as ongoing global disputes, The demand for OLED TVs is expected to gradually improve from Q2 and overall demand is expected to start picking up from the second half. Accordingly, we aim to secure enhanced revenue and stable profitability by improving product mix based on increased sales of strategic products including QNED and OLED TV and expanding coverage with new models. We will continue to drive greater contributions in business performance from growth in software platform business. Let me share the first quarter results of VFs. Revenue achieved double-digit growth compared to the previous year, thanks to stable growth in in-vehicle infotainment business, as well as new OEM business and stronger sales from existing OEMs at LG Magna E powertrain. Though there were some cost pressure due to increased headcount, Especially with R&D recruitment to drive the SDV sector, we continue to secure profitability on the back of program mix improvement as well as operating leverage effects and cost structure stabilization. Next, the outlook for the second quarter. Growth in global demand for automotive and electric vehicles is expected to slow somewhat due to the impact from weakening consumer purchasing power. However, demand for high value-added vehicle components is expected to continue to grow. Accordingly, we will see top-line growth by expanding sales of differentiated products based on awarded business and secure stable basis for profitability by optimizing operations considering market risk and enhancing efficiency in resource management.

I will share the first quarter results of BS.

Global market demand is showing a gradual recovery and revenue grew year-on-year on the back of new gaming monitor launches and enhanced sales of strategic products such as e-board and LED signage. Operating profit decreased year-on-year due to intense price competition and rising component prices as well as investments in new businesses. However, it turned around to be in the black compared to the previous quarter, with expanded sales in IT during the peak season and efficient cost management. Now let me share the outlook for the second quarter. IT demand is expected to maintain similar levels as last year until the second half. An information display market is projected to maintain a growing trend, though the pace of growth may slow somewhat. However, continued growth in demand is expected for gaming monitors and LED signage. We will pursue top-line growth through launch of new IT products aligned to customer needs including OLED gaming and smart monitors and more business opportunities for B2B products. We will focus on securing profitability through efficient resource management. Last but not least, let me share our ESG activities and achievements. LG Electronics continues to secure market competitiveness by strengthening its eco-friendly appliance lineup based on differentiated technological capabilities. Last March, we launched LG Trom object collection wash combo, an all-in-one washer dryer that can complete a wash and dry cycle with no need to transfer the load. It is the only washer dryer in Korea to adopt heat pump technology 100%. We also released Dual Cool which enables excellent cooling and heating functions by adopting a dual inverter heat pump for the first time as a wall mount air conditioner and satisfies A++++ levels, the highest energy rating in Europe. These new products boast greatly enhanced energy efficiency. In recognition of such technological prowess, LG Electronics was named 2024 Energy Star Partner of the Year, sustained excellence by the U.S. Environmental Protection Agency and the U.S. Department of Energy. This marks the 11th time since 2012 that LG has been named Partner of the Year, and the honor recognizes LG's commitment and achievements in protecting the environment, fighting climate change, and reducing energy with Energy Star certified products. Moreover, we received the Performance Award provided by the U.S. Air Conditioning, Heating, and Refrigerating Institute for the seventh year in a row. The award was bestowed after going through a rigorous evaluation process by the U.S. AHRI, and we received acknowledgement for the technology and quality of our differentiated heat pump solutions in line with decarbonization and electrification trends. Last February, we swept up first, second, and third place for top loaders with top energy efficiency named by the U.S. Consumer Reports, and all the products in the rankings were also designated as Green Choice products which are named based on water and energy efficiency. Meanwhile, we obtained the AI Management System Certification from the Korean Standards Association in recognition for our data security and ethically responsible AI management practices throughout the entire lifecycle of AI-powered home appliances. LG Magna also acquired certification for its vehicle cybersecurity management from TUV Rheinland, a global certification organization. LG Magna is preemptively responding to changes in the mobility sector by establishing a cybersecurity system ahead of automated requests. These certifications are meaningful in that they indicate we have preemptively secured safety, accountability, and transparency related to our technology application. We plan to strengthen our competitive position in the global market and provide differentiated customer experiences based on advanced technology that places people and the environment first. I will now outline our strategic direction in 2024. We have shared our strategy and vision through the vision announcement in July last year and in this year's shareholders meeting. Our vision is to go beyond a stronghold in appliance to transform into a smart life solution company that provides new value and experience to customers across all spaces connected with customers' lives, including home, commercial space, mobility to even virtual space metaverse. To achieve this vision, we are expanding B2B business including vehicle components and HVAC, driving business models based on software platform including webOS for smart TVs in earnest, and advancing into big wave areas with high growth potential such as electric vehicle charging solutions. To share some of the meaningful progress we are seeing so far, B2B sales proportion is taking up more than 30% of sales in Q1 and contributing to stability in our business performance. The software platform business, including advertising and contents, continued to record rapid growth based on an enhanced business base and is expected to reach a $1 trillion level in annual sales this year. An electric vehicle charging business is poised to drive business in North America with the new U.S. Texas plant to lead to tangible business results. Such efforts to enhance our portfolio seem to be gaining positive response from the market participants home and abroad. The recent successful Global Bond Issuance was also a testament to the market's trust in our sound and stable finance structure, as well as the high interest and positive reaction from global investors on our various efforts to create mid- to long-term business performance.

Going forward,

LG Electronics will exert the best of its efforts to improve operation efficiency across all of its business areas, strengthen core technology capabilities including AI and achieve a speedy transformation in its portfolio.

Thank you. That was it.

on the first quarter results and second quarter outlook on a consolidated basis and details by each business along with the strategic direction for 2024. We will now take questions.

Operator, please commence with the Q&A session.

질문을 하실 분은 전화기 버튼의 별표와 1번을 누르시기 바랍니다. 질문을 취소하시려면 별표와 2번을 누르시면 됩니다. 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 number star 1. For cancellation, please press star 2, star and 2 on your phone. The first question will be presented by Simon Woo from Bank of America. Please go ahead with your question.

Yes, thank you for the question. My name is Woo Dong-jae. First of all, thank you for your good performance. The first question is related to H&A. It's because AI is so important in the tech industry these days. What is the difference between the AI strategy in our home appliances? I would appreciate it if you could tell us about the impact and prospect of this in the future. And the second question is, how do you see the demand, prospect, and management of the electric car market in the vs? Especially from the perspective of investors, the market growth rate

Thank you for taking my question. First of all, I congratulate on your good performance. I have two questions, first for home and appliance business. So we see the gaining momentum in AI for the tech industry. So for the home appliances, what is your AI strategy? and what is it that sets you apart from others? Can you also add color on how you predict the market?

My second question regards vehicle solution business. What is your take on EV market demand and its prospect? In the perspective of investors, it seems like the market growth rate is dwindling and this is becoming a point for concern. What kind of responsive measures do you have in LG's business perspective?

First of all, I would like to answer the question from the H&A department of AI strategy at Gajon. Gajon has been applying Wi-Fi since 2011, and released a new artificial intelligence brand in 2017. In January 2022, every time customers wanted to upgrade their new features, we were presenting up-to-date applications, and we were presenting AI applications before others. As you know, this year, at the C-show, we re-established the AI meaning of AI in the sense that we provide customers with more diverse experiences by being more considerate and empathetic of the users. It's not just AI.

I will first address your question on AI strategy from home and appliance. In 2011, we launched our Wi-Fi-enabled home appliances. In 2017, our AI-based ThinQ lineup. And in January 2022, our up appliances, where new features are upgraded whenever desired by customers. Such footprints show how we were ahead of others in delivering AI-powered home appliances. During this year's CEF, we have redefined the term artificial intelligence as affectionate intelligence as part of our commitment to better serve our users and to provide exceptional customer experience. Rooted in deeper understanding of customers, the AI we have go beyond just artificial intelligence to delivering a wide range of services that customers can actually enjoy.

Elec S & Gdr 144A Elec S & Gdr 144A In order to have such affectionate intelligence solutions not only be embedded in certain premium products, but across all of our appliances,

We are designing and building an ecosystem of on-device AI chips and OS-based platforms to have them incorporated into our smart homes. LG Electronics have developed preparatory on-device AI chips and OS for home appliances in realizing affectionate intelligence at home. Development of upgraded AI chips for home appliances are underway since last year and we plan to move forward with diversifying our line-up of AI chips to be employed in our affectionate intelligence products.

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Experts of each product domain are currently analyzing data of various products, customers, and environment to step up in AI modeling of our affectionate intelligence. and therefore, customer needs, even those that go unnoticed by customers themselves, are being addressed. Furthermore, Gen AI-based voice recognition will be deployed in our AI Hub and voice-enabled appliances to further sharpen customer experience. Thank you.

Yes, I will answer the question. In the case of the demand in the car market, the growth rate has been slightly reduced recently, Let me answer your second question regarding vehicle solution business. The growth speed of EV demand has slowed down slightly,

but the market is expected to maintain its growth momentum thanks to EV tax credit in the U.S., carbon emission cap in Europe, and the expansion of charging infrastructure. In the long run, we expect growth rate to be in 20% level.

The company is planning to expand the market Elec S & Gdr 144A

In order to secure competitiveness in EV driving module market where high growth is expected, we aim to secure technology leadership in e-powertrains integrated modules by maximizing joint venture effect, strengthen product competitiveness by establishing production system for drive unit and IPGM, and expand our customer pool of global OEMs by tapping into Magna's customer network, which runs across diverse sectors. By doing so, we aim to grow sales faster than the growth speed of market demand.

Next question, please.

The following question will be presented by Sungkyu Kim from Daiwa Securities. Please go ahead with your question.

Yes, hello. Thank you for the question. I have two questions. The first question is about the vehicle solution. What is the sales and profitability of the three business departments in 2024, including the V.S. headquarters and the main business? I would appreciate it if you could tell me in detail. The second question is about the BS business. Regarding the BS business, as you mentioned earlier, I would appreciate it if you could share the sales ratio and the direction of growth of the EV charging business. And I wonder if there will be any difference in promoting such a new business

I have two questions, one for vehicle solution and the other for business solution. First for vehicle solution, what is your revenue and profitability estimation of vehicle component solutions business in 2024? Can you break it down by business? My second question regards business solution. As mentioned by CFO earlier, the EV charging is becoming a major part of your business. Can you share with us how much EV charging takes up from the sales, the overall sales of business solution and its direction of growth? Demand is slowing down and subsidies on EVs are decreasing. Is this market change taking its toll on your pursuit of new business?

Yes, I will answer the question from the V.S. Department. It is expected that the uncertainty of the business economy, including the decrease in demand for cars, will remain this year. However, the company is aiming for high growth for the market through the addition of continuous new projects. In the next 24 years, there will be a strong growth in sales Let me answer your first question regarding vehicle solution. Uncertainties in the business

including dwindling demand for vehicles is likely to persist into this year. Despite the expected difficulties, we aim to post high growth compared to market average by continuously increasing new order intake, and we believe we will be able to make a solid growth in revenue for this year based on the existing orders. will be impacted by the slowing demand of the global automotive market in the short run. However, we expect to continue to enjoy year-over-year growth driven by the pushed up sales of EV components as new projects are entering the mass production phases and existing projects are increasing order volumes.

. . . . .

In terms of profitability, we expect the figures to improve primarily on the back of the increase in sales volume. In addition, years of our efforts in enhancing internal sales capacity is paying off, improving project and product mix which we believe will work as a tailwind for the business. Moreover, we will improve cost structure across the whole operation including SEM and also the production efficiency to further enhance profitability on top of the effect we enjoy from the increased volume.

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I'll now answer your second question regarding EV charging business. Our EV charging business is still at its early stage. Please excuse us for not being able to share specifics at this point. To briefly talk about the growth direction of EV charging business, we have a goal to grow the business to a trillion-one level in size in a short period of time. The production facility was built in Texas late last year, and we have received UL certification, which is highly trusted in the U.S., proving our prowess in product stability and manufacturing technologies. Dedicated sales team is organized to secure new customers, and we plan to spare no efforts in maintenance, too. We will keep expanding the business to overseas markets, including Europe and Asia, one by one. In terms of operation, LCE would like to support stable operation of customers by providing ways to reduce maintenance cost, remote control solutions to increase operation rate, and advertisement solutions that can generate additional stream of revenue.

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We are currently developing diverse solutions that can address end-users' pain points, such as difficulties in finding a charging station, long waits, heavy cables, cumbersome payment system, and failures occurring during charging. By securing differentiated solutions beyond charger hardware, we aim to become a charging solution provider in the long run.

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The growth of the EV market is dwindling, as early adopters' strong initial demand has faded into the background, consumer sentiment is thwarted by high interest rates, subsidies are shrinking, and the lack of charging infrastructure is showing no visible signs of improvement. sees it as a temporary phenomenon, and EV sales volume is believed to continue to rise in the long run. Charging business is also expected to grow continuously, as decreasing demand for EVs results in part from the lack of charging stations.

Next question, please.

The next question is from Kangho Park from Daesin Securities. The following question will be presented by Kangho Park from Daesin Securities. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. I have two questions. I have two questions. I have two questions. I have two questions. I have two questions. I have two questions. Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A I have two questions, one for corporate wide operation and the other for home entertainment.

First corporate-wide operation. LGE issued dollar-denominated public bond in April. And this was the first global bond deal in 17 years. What is the back story?

My second question is for home entertainment business. So starting this year, there has been a lot of importance and growth mentioned for the webOS business. Could you elaborate on the webOS profit model and the proportion and profit rate for each profit model respectively?

Global bond is directly answered by CFBOK.

Yes, I will tell you about the check-in reaction. The company has been maintaining its cash flow with various sources in domestic and foreign capital markets. The question regarding global bond issuance will be answered by CFO. Let me answer your questions regarding the corporate-wide operation and the issuance of

dollar denominated bond. We have maintained funding competitiveness based on diverse sources in domestic and international capital market. When borrowing from abroad, we have raised capital mostly through banks and private placement. But at the same time, we have been keeping our eyes on the public dollar bond market to enhance our competitiveness.

After the U.S.-U.S. U.S.-U.S. U.S. U.S. U.S. U.S. U.S. U.S.

The Federal Reserve's decision to adopt tightening policy has caused the U.S. dollar to strengthen and high interest rates in the U.S. to persist. It became clear that raising capital from dollar-denominated public bonds is better than borrowing from banks and private placements. We also noticed that many foreign investors are getting increasingly interested in LGE, thanks to our solid business results and financial stability. Taking this as an opportunity, we decided to issue a global public bond in April.

Despite the fact that the bond issuance environment in the U.S. is not favorable due to the decline in interest rates and the severe Middle East dispute, is a global investment fund that has received an investment order of 9.4 billion won from a total of 339 investors through active communication activities with global investors, including ESG bonds of 300 million won, and a total of 800 million won of global bonds were successfully issued. According to media reports, the successful issuance of the bond is due to the fact that LG Electronics' status and reputation in the overseas capital market

We were faced with many difficulties in issuing bonds as the market gave up hopes on seeing lower rates in the US and conflict in the Middle East worsened. However, by communicating closely with global investors, we received orders from 339 investors The highest number marked in the order book was $9.4 billion. And we were able to successfully issue bonds worth $800 million in total, including a sustainability bond worth $300 million. According to the media report, this transaction is well received by the market as an evidence of our strong position and reputation in the global capital market.

Yes, I will answer the questions related to WebOS. The profit model of the company's WebOS-based platform business consists of three major things. I can't tell you exactly the ratio or the profit rate of each profit model, but the most important profit model is the commercial business based on CTV. We provide both quality entertainment content to customers through LG channels across 3000 stations. Let me answer your question on WebOS. Our WebOS platform business profits from three models.

Though it is difficult to share on exact numbers for each profit model, our CTV-based ads make up the largest share where customers get to enjoy for free high-quality entertainment content via about 3,000 OG channels. Customer analysis is done at the same time to have tailored ads delivered. Such tailored advertisements make it possible for ad agents to deliver High-quality ads that match the targeted audience while, at the same time, customers can be provided with ads that appeal to their taste.

Another major profit model will be the contents business, where we strategically partner on those leading content players to deliver good content.

Following smartphones, TVs have become platforms for consumers to enjoy contents, including OTT services. We are actively navigating to ride on this opportunity in further expanding the business.

The last of the three revenue models is to sell module parts to other TV manufacturers to drive web OS. Elec S & Gdr 144A

Last but not least, by selling module parts to other TV set makers for webOS operation. We not only raise profit but also expand the ecosystem through webOS based alliances. Profitability currently stands high above our TV hardware sales and we look forward to greater contribution towards profitability on the back of incremental platform sales. To maintain the growth trajectory of our webOS business, We will be committed to various efforts including but not limited to stronger strategic partnerships. Thank you.

Thank you. Next question please. The following question will be presented by Dongwon Kim from KB Securities. Please go ahead with your question.

Yes, thank you for the question. I will ask each of you a question about the previous company and H&A home appliances. First of all, I would like to ask if there are any projects that are expected to grow or decline this year in terms of overall business prospects and especially growth that you are looking at from LG Electronics. Next, I would like to ask you to share with us how you are looking at the profitability prospects of the H&A home appliances project this year based on raw materials, logistics, and changes. That's all.

I have two questions, one for corporate wide operation and the other for home appliance business. First question, what is your projection of the business for 2024? Which businesses are likely to enjoy noticeable growth and which will face difficulties?

My second question is for home and appliances. Can you share on how you project profitability to be in light of raw material and logistic costs?

Let me first answer your question regarding business protection. Although difficulties in business environment, such as uncertainties in the global economy, is likely to persist, LGE aims to proactively respond to this external development on the back of improved business portfolio, which we have been driving for several years.

First of all, in the process and TV business, is expected to improve demand from the second half of the year. We will implement a business strategy by optimizing the dynamics of demand change, such as the launch of innovative new products and the volume of volume, and implement a subscription process and HVAC co-operation business, as well as a new business model of foreign OS platform-based service business, and increase profits and profits by increasing profits and profits by increasing profits and profits by increasing profits and profits by increasing profits and profits by increasing profits and profits.

Gradual recovery of demand is expected from the second half in home appliance and TV, which are our main businesses. Along with introducing new innovative products, we will continue with strategies that are aligned with demand changes and market dynamics, such as targeting volume zone segment. And by expanding sales and profit contribution of new business models, including subscription, HVAC, and webOS-based platform services, we aim to achieve year-over-year growth in revenue and profitability.

In the case of electric vehicles, although there is a risk that the growth rate of the number of electric vehicles will be reduced, we will continue to increase the growth rate of the number of vehicles by expanding the OEM trade line in the electric vehicle parts business, For automotive electronics, despite concerns over the possibility of slowdown in EV demand growth, we expect to maintain a high level of growth in revenue

and secure stable profitability by continuing to increase awarded orders on the back of expanded customer pool of OEMs in EV component business, and by pushing up sales and improving mix of infotainment products, which are leading the global competition.

In addition, we will continue to develop new products such as electric car charging

New business such as EV charging, which is getting ready to start off, is also expected to produce meaningful results.

Elec S & Gdr 144A Regarding the rise in LCD, in terms of risk management including cost structure, stability in raw material prices,

and overall cost is likely to continue. However, we are keeping close eyes on the possibility of an increase in logistics cost triggered by geopolitical risks such as conflict in the Middle East. Regarding the rise in LCD panel price, which started to pick up last year, we are in search of solutions that can minimize its impact on profitability. We will minimize these risks by enhancing efficiency of global supply chain and optimizing production system to improve its flexibility, and by strengthening cooperation with sales channels to prevent additional execution of marketing budget to deal with excessive inventory held by distribution.

Yes, I would like to respond to the question about raw materials and logistics. First of all, I would like to talk about raw materials. In the first quarter of 2014, despite China's poor economic situation, the real demand for raw materials continued, and due to the delay in recovery of the economy in major countries, the price of raw materials was low, but due to the increase in production cost and high energy costs,

Let me answer your question on raw materials and logistic costs. To begin with, raw material costs, despite China's fiscal stimulus in the first quarter of 2024, persisting weak demand and delays in economic recovery in major countries have led to limited growth in raw material demand But at the same time, elevated cost of product sites due to high oil prices and energy costs have weighed on our company's purchase price.

In this situation, the company has been able to maximize the optimal sourcing capacity of the first quarter of 2014 with the best sourcing capacity of the first quarter of 2014 in order to overcome the protection of trade and industry such as global volume integration and logistics.

The raw material prices, however, have improved slightly Q-on-Q this first quarter on the back of negotiations based on global volumes through reselection of strategic distributors by region since last year, along with optimal sourcing to overcome the impacts from logistics and trade barriers such as protectionism.

In the case of the second quarter raw materials, oil and chemical raw materials have all increased due to the increase in oil prices due to the spread of the war between Israel and Iran, and the production volume of the East China Sea Self-Defense Force in China has also increased a lot due to the reduction in the production volume. The party is trying to minimize the price impact by leveling the price and increasing the volume through the expansion of the low-priced Chinese iron ore.

In the second quarter of 2024, rising oil prices from escalating Iran-Israel tensions have led to ups in petrochemical prices, while cuts in production at Chinese copper smelters have driven up copper prices. As part of the broader effort to minimize effects of rising purchase price, we will diversify and expand on low-cost Chinese vendors to match price and negotiate additional volumes.

I would like to talk about logistics. In the case of the first quarter, there was a part of the rise in the sea operation due to the issue of Honghae, but the party has minimized the impact of 손익 through the optimization of the global production area and the performance of the pre-organized sea operation contract and the optimization of the global production area. Fortunately, since April, there has been a continuous trend of improvement in the selection situation and the decline in the operation of each ship. Elec S & Gdr 144A

for logistic costs as of first quarter of 2024. Shipping rates increased somewhat due to impacts in the Red Sea, but we minimize the effects on our profit through successful contract renewals, as well as timely response at our global sites. Fortunately, as of April, vessel space availability has started to improve and carriers' request for additional rates is on the decline. Furthermore, Thank you. Thank you for your question.

Next question, please. Currently, there are no participants with questions.

Please press star 1, star and 1 to give your question. Are there any more questions? Once again, currently there are no participants with questions. We will wait for a second until there is another question.

I believe there are no more additional questions, so that brings us to the end of LG Electronics' first quarter 2024 conference call.

LG Electronics will be committed to improving shareholder value and please keep a watch on our activities. If you have any further questions, please contact our IR team for further detail. Thank you.