Good morning and good afternoon. Thank you for joining LG Electronics Earnings Release conference call for the fourth quarter of 2023. 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 one on your telephone. I would now like to hand the conference over to the first speaker. Good afternoon. My name is Sunyoung 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. I-kueon Kim from Home Appliance and Air Solution, Mr. Jeong-hee Lee from Home Entertainment, Mr. Ju-yong Kim from Vehicle Component Solutions, Mr. Dong-cheol Lee from Business Solutions. We are also joined by Mr.
Sang-ho Park from Global Business Management Group, Mr. Choong-hyun Park from Corporate Business Management Division, Mr. Hong-su Lee from Accounting Division, and Mr. Hyong-kyun Kim from Finance Division. Please note that all statements we will be making today regarding the financial results of the fourth quarter are subject to change in accordance with the results 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 KRW 23.1 trillion, and operating profit was KRW 313.1 billion. 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 for 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 KRW 6.7 trillion in sales and KRW 115.6 billion in operating loss.
HE recorded KRW 4.2 trillion in sales and KRW 72.2 billion in operating loss. VS recorded KRW 2.6 trillion in sales, KRW 5.7 billion in operating profit, and 0.2% in profitability. BS recorded KRW 1.3 trillion in sales and KRW 89.5 billion 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 -KRW 76.4 billion in net income. Next, on cash flow.
Q4 cash flow from operating activities was KRW 1.5 trillion, and cash flow from investment activities was -KRW 1.1 trillion. Accordingly, net cash flow was KRW 385.2 billion. When reflecting cash flow from financial activities of -KRW 9.8 billion, cash balance at the end of Q4 increased KRW 375.4 billion from the previous quarter to stand at KRW 8.5 trillion. 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 KRW 60.2 trillion, liabilities at KRW 36.7 trillion, and equity at KRW 23.5 trillion. 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 U.S. 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. The recovery of demand in the global appliance market is delayed. Revenue increased year-over-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 B2B 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 TVs. 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 VS. Revenue grew year-on-year, thanks to increased sales of electric vehicle components. Though there were factors temporarily pushing costs up , 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 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 VS. 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 gram Pro, 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 extend 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 service 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. Environmental Protection Agency for the first time in the industry, regarding 7 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 4 and 3 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 one if you have any questions. Questions will be taken according to the order you have pressed the star and one. For cancellation, please press star and two on your phone. The first question will be provided by Kang-ho Park from Daishin Securities. Please go ahead with your question.
[Foreign Language]
Thank you for taking my questions. I have two questions, and my first question is about corporate-wide operations. This year, we are expecting greater macroeconomic and geopolitical uncertainties at the moment. Under such circumstances, can you share the corporate-wide revenue and profitability guidance of 2024? And also, it will be appreciated if you can share in which business you expect specific growth or weak performance. My second question is on H&A. I think in 2023, you achieved results and performance by maintaining the two-track strategy, covering the volume zone. Is there any change in terms of strategy? Also, with Chinese competitors joining the low to mid-priced home appliance market at an accelerated pace, what is your strategy for boosting LG Electronics home appliance market shares?
Yeah, 먼저 전사 부문 관련 질문에 답변드리겠습니다. 2024년의 경우 긴축정책 기조 완화에 대한 기대가 있고, 점진적인 수요 회복도 기대되는 등 전년도보다는 개선된 사업 환경을 전망하고 있습니다. 하지만 미국을 포함해서 주요국의 경기 침체 우려 등이 여전하고 매크로 경제 환경 전반적인 불확실성이 상존할 것으로 예상되기 때문에-
...어느 때보다 시장 환경 변화에 대한 선제적인 대비와 새로운 성장 모멘텀의 확보가 매우 중요한 한 해가 될 것으로 생각됩니다.
Let me answer your question about corporate-wide operations. In 2024, we expect a better business environment compared to the previous year, due to expectations on ease of austerity measures and gradual demand recovery. However, uncertainties in the macroeconomic environment is projected at the same time, as there are concerns on economic recession in major countries, including the United States. We believe 2024 is going to be very important in securing new growth momentum and taking proactive measures against the changing market environment, more than any other time.
우선 가전, TV 등 주력 사업 분야에서는 다행히 원재료 가격이나 물류비 등 주요 원가 요소가 안정적일 것으로 전망되는 만큼, 투 트랙 전략 등 시장 수요 변화에 적극 대응하는, full potential 전략을 통해서 매출 성장과 함께 안정적인 수익성을 지속적으로 확보해 나갈 계획이고요. 전장과 HVAC을 중심으로 한 B2B 사업 분야, 그리고 전기차 충전 등 그 신사업 영역에 있어서도 의미 있는 규모의 신규 투자를 진행함과 함께, 지역 및 포트, 고객 포트폴리오 다변화를 통해서 신규 수주를 확대하고, 매출 성장을 가속화해서 미래 성장 동력으로의 기여를 더욱 강화할 생각입니다.
In our major business, home appliance and TVs, we expect major cost factors, including raw material costs and logistic costs, to remain stable. Therefore, we would like to continuously seek for stable profitability together with revenue growth through full potential strategy that actively responds to changes in the market demand through a two-track strategy and so on. In terms of B2B business, concentrating in electric devices and HVAC, in new business area, including EV charging solutions, we would like to make meaningful investments and accelerate revenue growth and expand new orders through diversifying regional and customer portfolio, so that they can further make contribution as a future growth engine.
종합적인 연간 가이던스를 드린다면, LG이노텍을 제외한 기준, LG전자 전사 기준의 2024년 매출은 성장세로 전환할 것으로 예상되고요. 수익성 측면에서는 전년 대비 개선이 가능할 것으로, 기대하고 있습니다.
Comprehensively, the corporate-wide 2024 revenue, excluding that of LG Innotek, will turn to the growing curve, and we plan to improve profitability year-on-year.
네, H&A 답변 드리겠습니다. 그 당사는, 그 앞서 말씀하신 대로 시장 수요의 변화에 맞춰서 프리미엄과 볼륨존의 투 트랙 전략을 지속적으로 실행하여 왔으며, 이후에도 시장 상황과 경쟁 변화에 선제적으로 대응하기 위한 전략을 추진할 계획입니다. 먼저 프리미엄존에서는 경쟁우위 제품 그리고 시장 선도 제품을 강화하여 중국 업체가 따라오기 어려운 초격차를 만들어 갈 것이며, 동시에 중저가 시장에서는 ODM 사업 확대뿐만 아니라 전략 시장 중심으로 중국 업체 진입에 대응한 투자 확대를 계획 중에 있습니다.
Let me answer your question on H&A. As you said, we have employed a two-track strategy, covering both the premium and volume zone, in alignment with market demand changes thus far. We will continue this approach, moving forward, to preemptively respond to changes in both the market and competition landscape. We'll further ratchet up our competitive and market-leading products in the premium space in order to further widen the gap with Chinese makers, so that they can't even catch up later. In parallel, we plan to expand ODM business in the low to mid-priced market, while also bolstering investment to respond to Chinese companies in strategic markets.
예, 그 시장별로는 정도의 차이는 있습니다마는 최근 시장 경쟁이 심화되는 와중에, 특히 중국 업체들의 부품 경쟁력이 일부 강화되는 모습을 보이고 있습니다. 이에 당사는 프리미엄존은 혁신 부품 경쟁력에 기반한 대용량, 고효율 제품과 차별화된 디자인, 성능을 바탕으로 지속 강화하고 있으며, 볼륨존에서는 제품과 가격 커버리지 보강을 통해 시장 점유율이 꾸준히 개선되고 있습니다. 이상입니다.
Although we might find gap differences from market to market, the brand power of Chinese companies has grown a bit amidst fierce competition. In response, we have continued ramping up the premium zone by tapping into large capacity and high efficiency products based on our competitive key components, unrivaled design and exceptional performance. In the volume zone, we have improved our market share by further enhancing our product and price coverage.
다음 질문 부탁드리겠습니다.
Next question, please.
다음으로 질문해 주실 분은 뱅크오브 아메리카의 우동제 님입니다.
The following question will be presented by Simon Woo from Bank of America. Please go ahead with your question.
네, 질문 기회 주셔서 감사합니다. 우동제입니다. 두 가지 질문인데요. 첫째는 HE 사업부고요. LCD 패널은, 중국 업체 중심으로 시장이 이제 꽤 많이 재편되었습니다. 그래서 우리 LG전자 중국 패널 업체에 대한 의존도, 아마 당연히 증가하고 있을 것 같습니다. 이거에 따른 어떤 그 리스크 관리, 중심으로 설명해 주시면 감사드리고요. 두 번째 질문은 자동차 VS 부품인데요.
...미국 등 그 각국의 전기차 보조금 지원 대상 차량이 나름대로 줄어들고 있잖아요. 그거에 따른 그 전기차 및 전기차 부품 수요 성장률이 둔화될 수 있는 리스크가 있잖아요. 그래서 우리 경영진분들이 이에 대한 전해 및 영향을 설명해 주시면 감사하겠습니다.
Thanks for taking my questions. This is Woo Dong-jae. I have two questions. First, on HE, with the LCD panel market going towards Chinese producers, I think LG Electronics is relying more on Chinese panel makers. What is your response to increased risk from this trend? My second question is on vehicle solution. In the United States, the number of EV subjected to receive subsidies is on a decline. Accordingly, we are expecting a drop in demand in EV and EV components. I would like to ask your thoughts and impact on such circumstances?
네, HE 본부 LCD 패널 소싱에 관련된 질문에 답변드리겠습니다. 이미 알고 계신 것처럼 LCD 패널의 경우 중국 패널 업체들의 점유율 확대는 전체 TV 시장이 해당되어 당사도 중국 패널사 구매 비중이 높아지는 것은 사실입니다. 그러나 당사는 매출액 기준 글로벌 TV 1위 업체로서 대규모 물량을 운영하고 있고, 이로 인해서 다수의 중국 패널 업체들과 안정적인 파트너십을 구축하여서 패널 수급에는 이슈가 없습니다.
Let me answer your question on HE's LCD panel sourcing. It is true that the Chinese panel makers' market share rose in the LCD panel market, and we have also purchased more panels from Chinese makers. But we have operated volumes as the global number two TV business in terms of revenues and established stable partnerships with a number of Chinese panel makers. So we won't see issue with panel supply.
또한 중국 이외에 대만, 일본 등 중국의 국가의 패널 업체들로부터도 일정 물량의 물동을 수급하여서 리스크를 최소화하고 있고, 이와 더불어 LCD TV에 편중된 타 TV 업체 대비 OLED TV 비중이 높은 것도 실제 리스크 감소 요인이라고 생각합니다. 이상입니다.
In addition, we have minimized risk by acquiring supply from diverse panel makers outside of China as well, like Taiwan and Japan. Unlike other TV companies going toward LCD TV, we have high proportions of OLED TV within our portfolio, and that also helps in reducing our risk.
예, VS 본부 답변드리겠습니다. 그 2024년 IRA 개정의 경우 세액공제 혜택을 받을 수 있는 전기차 차종이 전년 대비 감소하여 단기적으로는 당사 부품이 장착된 일부 전기차 보조금 수급에 영향을 줄 수 있으나, 완성차 업체별 200,000대로 제한되어 있는 보조금 지원한도 대수가 폐지되어 중장기적인 전기차 보급 확대 측면에서 긍정적인 측면도 있습니다. 이에 당사는 시장과 고객 상황 변화를 예의주시하고 있으며, 이를 통해 경쟁력 있는 사업 운영 전략을 선제적으로 수립하여 시장 상황 변화에 적극 대응해 나가도록 하겠습니다. 이상입니다.
Let me answer your question about vehicle solutions. To elaborate furthermore on the IRA revision in 2024, the number of EV models subjected to receive tax benefit dropped, and this may have impact on several EV demand that has LG components installed in the short- term. However, there are positive sides in the mid- to long- term perspective, as more EVs will be rolling in the market due to the withdrawal of the limits that currently cap subsidies at 200,000 units per car makers. Therefore, we would like to keep a close eye on the market and customer changes so that we can proactively establish business operational strategies that allow us to win in the market and eventually respond to the changing market environment. Thank you.
다음 질문 부탁드립니다.
Next question, please.
다음으로 질문해 주실 분은 KB증권의 김동원님입니다.
The following question will be presented by Kim Dong-won from KB Securities. Please go ahead with your question.
예, 질문 기회 감사합니다. 저는 BS와, H&A 본부에 질문드리겠습니다. 먼저 BS는 미래 성장을 위해 투자 확대를 추진 중이신 것으로 알고 있습니다. 로봇과, 전기차 충전 등 신사업 추진 진행 상황에 대해 공유 부탁드립니다. 다음은 H&A 질문입니다. HVAC을 포함한 B2B 가전 사업 전망과 중장기 사업 규모, 그리고 북미와 유럽 점유율 확대 전략에 대해 의견 부탁드리고요. H&A 본부의 B2B 매출 비중도 함께 말씀 부탁드리겠습니다. 감사합니다.
Thank you for taking my questions. I have two questions, and my first question is on BS. I understand that you are making greater investment to accelerate into future growth. Can you give us some, like, updates on your new business, such as robots and EV charging solutions? Second, on H&A, what is the forecast for your B2B home appliance business, including HVAC? And please size that for us in the mid- to long- term. I'm also curious about your strategy for boosting market shares in North America and Europe, and B2B sales proportions within the H&A company.
아, 네, 먼저 저 BS 본부 신사업 관련 질문 답변드리겠습니다. 먼저 로봇 사업 같은 경우는 저희가 배송 물류 영역을 중심으로 지금 성장을 추진하고 있습니다. 배송 로봇은 시장이 이미 형성된 푸드 앤 베버리지를 영역을 볼륨 존으로 지금 활용하고 있고...
...물류 영역에서는 해외 시장 개척을 통해서 사업 성과 확대에 좀 주력을 할 예정입니다. 아울러 2024년에는 리테일 그리고 호스피탈리티 등 다양한 버티컬에 진출을 할 계획을 가지고 있습니다.
Let me answer your question on BS new business. Robot business is driving growth in delivery and logistics. For delivery robots, we would like to leverage the already established food and beverage market as a volume zone, and for logistics, our focus would be on paving the ground in overseas markets to expand business performance. We have further plans in 2024 to advance into various verticals, such as retail and hospitality.
예, 다음으로 EV 충전 사업은 저기 보조금 축소 등으로 시장 성장세 일시적 둔화가 예상은 되고 있습니다. 다만 충전 인프라 확충에 대한 수요는 여전히 굉장히 강하다고 저희가 보고 있고요. 중장기적으로는 글로벌 친환경 규제 강화, 그리고 전기차 보급 확대 등으로 시장 성장 가속화가 예상된다고, 생각을 하고 있습니다.
If I may elaborate more on EV charging business, we do expect temporary slowdown in market growth as subsidy benefits are on a decline. However, we expect demand in establishing charging infrastructure to remain strong and the market growth to be eventually accelerated in the mid- to long-term perspective, due to stronger eco-friendly regulations around the world and greater EV supply.
예, 당사는 2023년에, 안정적인 품질, 버티컬 영업력, 그리고 유지 보수 체계 등을 기반으로, 이미 시장 진입을 했습니다. 2024년에는 급속, 초급속 충전기 개발을 통해서, 제품 포트폴리오를 강화할 예정이고, 영업 및 엔지니어링 인프라 구축을 통해서 지역 커버리지도 확대하고, 차별화 충전 솔루션을 확보를 해서 성장 기반을 구축할 계획을 가지고 있습니다. 이상입니다.
To respond to such environments, LG Electronics have entered into the market in 2023 based on stable quality, sales capacity in verticals and maintenance systems. We would like to develop fast chargers and ultra-fast chargers in 2024 to strengthen our product portfolio. Furthermore, we would like to expand regional coverage through establishing sales and engineering infrastructure, and secure differentiated charging solutions so that we can establish our fundamentals for growth. Thank you.
예, 다음은 H&A B2B 관련 답변 드리겠습니다. 그 B2B 사업은 HVAC 사업과 Built-in 두 가지 나누어서 설명드리겠습니다. 먼저 HVAC 사업에 대해서 좀 설명드리겠습니다. 북미와 유럽의 electrification 트렌드 및 그 친환경 고효율 제품에 대한 수요 확대 기회는 지속될 것으로 보고 있습니다. 북미 시장의 경우는 세 가지 정도의 전략을 가지고 있습니다. 첫째, 신냉매가 적용된 인버터 히트 펌프 냉난방 제품 출시로 현지 적합형 라인업을 확대하고, 둘째는 미국 내 생산지를 구축, 그리고 마지막으로는 핵심 고객 접점인 설치 채널 확대 및 전국망 구축, 대형 유통 단계적 진입을 통해 시장 점유율 확대를 모색하고 있습니다.
Let me answer your question on H&A's B2B. Let me split into two, HVAC and built-in, in my answer. Let me talk about the HVAC business first of all. We expect the trends toward electrification and the demand for eco-friendly and highly energy efficient products are likely to continue to rise down the road. In North America, we will first upscale model lineups optimized for each region through a launch of new heating and cooling systems containing new refrigerant-using inverter heat pumps. Second, we'll establish production bases in the U.S. Last but not least, we will increase market share by expanding installation channels, key customer touch points, and entering large national channels step by step.
예, 유럽 시장에서도 그 HVAC 친환경 냉매가 적용된 히트 펌프 난방 신제품의 출시와 연계해서, 난방 전문 채널 확대로 시장 수요 적기 대응을 통해 시장 점유율을 확대할 계획입니다. 이를 기반으로 중장기 유럽 히트 펌프 난방 사업을 매출 조 단위 사업으로 성장시키고자 합니다.
For HVAC in Europe, we plan to enhance market share by timely addressing market demand within channels, specialized in heating products, like launching heaters with eco-friendly refrigerant using heat pumps. Based on all this, we intend to grow the European heat pump heater business to a multi-trillion KRW business in terms of revenues in the mid- to long- term.
네, 다음은 B2B Built-in 사업에 대해서 말씀드리겠습니다. 북미 시장의 Built-in 초 프리미엄 존은 시그니처 키친 스위트 그 브랜드로 디자인 차별화 및 제품 커버리지 확대를 통해 초 프리미엄 브랜드의 확고한 입지를 구축하고자 하며, 볼륨 존은 Built-in 제품 라인업을 기반으로 한 LG 브랜드로 유통 포트폴리오를 정비하여 매출 규모 확대를 하고자 합니다.
On the B2B built-in business side, for North American market, we'll address the super- premium zone with our SKS or Signature Kitchen Suite brands, to have a strong presence as a leading super- premium brands by way of our unique design and product coverage expansion.
... We will serve the volume zone with the LG brands by revamping our channel portfolio to drive top- line growth with built-in product lineups.
[Foreign Language]
In the European markets for built-in, we'll drive an accelerating flywheel towards diversifying our packages, optimized for each region and channel by incorporating 24-inch models and rank in the global top five in terms of built-in business, by creating more success cases of global built-in business. The annual B2B sales proportions in 2023 within the H&A company you asked about were in the low 20s, and we are now focusing on working on improving the overall value chain to raise this result. Thank you.
Next question, please.
[Foreign Language]
The following question will be presented by S.K. Kim from Daiwa Securities. Please go ahead with your question.
Yeah, 안녕하세요. 질문 기회 주셔서 감사합니다. 저도 전사 쪽에 한 가지, 그리고 VS 본부 쪽에 한 가지 질문드리겠습니다. 우선 전사 쪽에서는 올해 그 컨슈머 제품들에도 그 AI의 어떤 채용들이 상당히 확대될 것으로 예상이 되는데요. 당사의 AI와 관련해서 제품화 추진 현황 그리고 향후 계획에 대해서 말씀 부탁드리겠습니다. 두 번째는 VS 본부 관련해서요. 그 작년 말, 2023년 말 기준으로 그 VS 본부 전체 수주 잔고가 얼마 정도인지, 좀 알려주시면 감사하겠고요. 그리고 그 지금 최근에 아까도 얘기가 좀 나왔지만, 전기차 시장 수요가 그 올해 좀 둔화될 것으로 예상이 되는데요. 혹시 최근에 수주한, 기존에 수주한 프로젝트 중에 혹시 취소된 건이 있는지, 그런 사례가 있으면 좀 말씀 부탁드리고. 그 마찬가지로 올해 신규 수주 목표, 그리고 올해 말에 지금 예상되는 수주 잔고 수준, 가능한 부분 알려주시면 감사하겠습니다. 감사합니다.
Good afternoon. Thank you for giving me such opportunity. I have two questions. My first question is on corporate-wide operations. I believe that this year we are expecting more AI consumer products in the market. Can you share your status and plans on AI product development? My second question is on vehicle solutions. Can you share the overall order backlog as of end of 2023? Since the EV market growth rate is expected to slow down this year, as mentioned previously, I would like to know whether there are any canceled projects out of the already signed backlog. What is your order target for this year and expected order backlog level as of end of this year?
Yeah, 전사 부문 질문 답변드리겠습니다. 먼저 LG전자가 추구하는 AI 방향성은, 단순한 기능 제공 중심의 인공지능을 넘어서 고객을 이해하고 공감하는 공감지능, the affectionate intelligence라고 하는 그런 차원을 실현하는 것입니다.
Let me answer your question about corporate-wide operations. LG Electronics select direction on AI is to go beyond simply providing function-based artificial intelligence and realize affectionate intelligence that understands and be empathetic towards our customers.
또한 당사 AI는 글로벌 기준 약 7억 개에 달하는 LG 스마트 제품들과 다양한 IoT 기기를 통해서 실시간 생활 데이터들을 축적, 활용하고 있고, 이처럼 실시간으로 축적되는 생활 지능이라는, 이 Real-Time Life Intelligence를 기반 구축하여서, 상호 연결된 기기들이 당사의 강력한 그 LG AI 브레인이라고 하는, 이런 기능을 통한 조화롭고 조율이 되는 그런 최적의 작동을 유도할 수 있는 지휘 기능, 이 Orchestrated Intelligence라고 저희가 명명을 했는데요, 그런 특성도 보유하고 있습니다.
Additionally, our AI have connections with over 700 million LG smart devices around the world, with Real-Time Life Intelligence, utilizing real-time life data through various IoT devices. Based on this, we are equipped with a so-called Orchestrated Intelligence that leads to, like, optimized operation by orchestrating connected devices with our LG AI brain.
아울러서, 이러한 데이터들은 저희가 자체 구축한 보안 시스템인 LG Shield라고 하는 이런 보안 솔루션을 통해서 안전하게 관리 및 학습이 되고 있고요. 또 저희 책임 지능이라고 하는데요, Responsible Intelligence라고 하는 그 기능을 기반으로 해서 당사만의 차별화된 이 AI를 통해서 고객에게 보다 나은 삶의 경험을 제공하고자 추진하고 있습니다.
Data that we collect is safely managed and learned through our security system or security solution called LG Shield, so that we can provide a better life experience to our customers throughout our differentiated AI based on responsible intelligence.
...향후에는, 이러한 지능을 기반으로 한 공감 지능, affectionate intelligence는 홈 공간에서 모빌리티, 커머셜 영역까지 확장을 시켜서 고객들이 더 의미 있고 가치 있는 삶에 집중할 수 있도록 돕고자 하고요. 이를 위해서 당사는 이 AI 통합 플랫폼인 ATOM 플랫폼 기반으로 AI 에이전트를 구축하여 고객이 머무르는 공간 어디에서나 인터랙티브하고 프로액티브한 최적화 서비스를 제공해서 고객 경험의 혁신이 가능한 소위 스페이스에서 서비스를 구현하고자 합니다.
Later, we would like to expand our affectionate intelligence based on such intelligence technology from home to mobility and commercial area, so that our customers can focus on a more meaningful and valuable life. For this, we would like to establish AI agents based on the integrated AI platform, ATOM, so that we can provide interactive and proactive services or Space- as- a-S ervice to our customers and eventually innovate customer experiences through optimized services.
[Foreign Language]
Touching upon more, last year, we have allowed voice command to control home appliances, TVs, differentiate TV screen quality and sound quality. And furthermore, we have introduced air conditioners, air purifier, washers and dryers so that it can understand the space and situation in the smart appliances. In terms of smart mobility area, where we can provide tailored services, we have commercialized In-Cabin Monitoring System for driver safety.
여기에 더해 올해는, 멀티모달 센싱을 통해 그 주변 상황과 맥락을 인지하고, 그리고 기계를 지휘할 뿐만 아니라, 사용자와의 감정 교류까지 가능한 자연스러운 대화 능력을 확보한, 개인화 가능한 AI 에이전트 기술을 좀 더 완성도를 높여서, 이를 스마트홈 분야에서 저희가 보이스 허브라고 하는 그 기능에 적용한 후에, 스마트홈 AI 에이전트라든지, 또 스마트 가전 TV 분야에서 보이스 ID 기반의 자동으로 계정을 전환하는 그런 기능 등 포함해서 다양한 개인 맞춤형 콘텐츠를 제공할 계획이고요. 이를 통해서, 이 AI 에이전트가 추천을 해주고, 콘텐츠나 서비스를 추천을 해주고, 또 인텔리전스 센싱 기술이 적용된 에어컨, 공기청정기를 추가로 상용화할 계획입니다. 아울러 온라인 채널 분야에서도 저희가, 전문화되어 있는 당사의 지식 기반 대화형 질의 응답 가능 챗봇, LLM 기술이 적용된 이 챗봇을 상용화해서 시장에 소개할 계획입니다.
This year, we would like to advance the completeness of AI agent technology, which allows personalization through user recognition and natural interaction that not only recognizes the situation and context through multimodal sensing, but also commands to the device and have emotional connection with, with users. Our plan is to apply this technology to Voice Hub in the smart home sector, so that it can be available in launching beta version of the Smart Home AI agent. In smart appliances and TVs, we would like to commercialize functions that automatically transfer accounts and recommend tailored content together with like air conditioners and air purifiers, equipped with enhanced intelligence sensing technology. In addition, we would like to commercialize chatbots using LLM that can interact and answer users questions based on our professional intelligence in the online channel field.
예, VS 본부 수주 잔고 관련 질문에 답변드리겠습니다.
2023년 말 수주 잔고의 경우, 저희가 기존에 100조 원에 육박하는 수주 잔고 확보가 가능할 것이라고 말씀드렸습니다. 이에 당사는 제품 경쟁력 및 시장 입지에 기반한 신규 수주 활동을 성공적으로 진행하였고, LG Magna e-Powertrain의 고객 파이프라인 확대 측면에서도 소귀의 성과가 있었으나, 일부 고객사들의 소싱 결정 지연 및 환율 영향으로 90조 원 중반 수준의 수주 잔고를 확보하고 있습니다.
Let me answer your question about vehicle solutions order backlog. Previously, we have disclosed that our order backlog will reach KRW 100 trillion as of end of 2023. We have successfully signed new orders based on product competitiveness and geographical conditions, and LG Magna e-Powertrain's expanded customer pipeline brought some results as well. However, due to delays in some customer companies sourcing decisions and foreign exchange impact, our order backlog remains at KRW mid-90 trillion .
네, 참조해서 주요 사업별 비중에 대해 말씀드리면, 인포테인먼트 제품이 잔고 수준의 50%대 후반 수준, 전기차 부품이 20%...
... 전기차 시장의 높은 성장세 및 LG마그나 e-파워트레인의 JV 시너지 효과에 힘입어 전기차 부품의 수주 잔고 비중이 전년 대비 큰 폭으로 증가하였습니다. 2024년 신규 수주 목표 및 연말 예상 수주 잔고의 경우, 현재 구체적인 수치를 말씀드리지는 못하지만, 지속적인 신규 수주 확대를 통해 수주 잔고 성장세를 이어나갈 계획입니다. 이상입니다.
Touching upon major business proportions, infotainment accounts for late 50% of order backlogs, while EV parts account for late 20% level and lamps mid-teen level. Thanks to the high growth rate in EV market and synergy effects from LG Magna e-Powertrain's JV, proportion of EV parts order backlog have shown a dramatic increase year-on-year. Please understand that I cannot disclose detailed targets or expected figures for this year. However, we would like to continue the growing trend of our order backlog by expanding the overall new orders. Thank you.
다음 질문 부탁드립니다.
Next question, please.
다음으로 질문해 주실 분은 SK 증권의 박형우 님입니다. The following question will be presented by Park Hyung-woo from SK Securities. Please go ahead with your question.
안녕하세요, SK 증권 박형우입니다. 저는 HE 그리고 전사 관련해서 두 가지 질문드리겠습니다. 먼저 HE 부문은 2024년 TV 시장과 OLED TV 시장을 어떻게 전망하시는지 여쭤보고 싶습니다. 지난해 저조했던 프리미엄 TV 수요가 올해는 개선 가능성이 있을지도 같이 말씀해 주시면 감사하겠습니다. 두 번째는 전사 관련인데요. 작년 2023년에 물류비율 인하에 따라서 우리 영업이익이 괜찮았었는데, 이 개선 규모 효과가 궁금합니다. 또한 더 중요하게는 최근 중동 지역 이슈로 운임비 상승이 감지되고 있습니다. 이와 관련해서 올해 2024년에 안정적인 물류비율 유지가 가능할지랑, 그리고 어떠한 영향이 있을지도 말씀해 주시면 감사하겠습니다. 이상입니다.
Good afternoon, this is Park Hyung-woo from SK Securities. I have two questions on HE and corporate-wide operations. First, how do you envision the OLED TV market and over-the-top market, respectively, for 2024? Do you have any insight on possible improvement in the weakened premium TV demand seen in 2023? And my second question is on corporate-wide operations. In 2023, I understand that you have seen some enhancement in operating profit due to logistics cost ratio drop. And can you share how much impact you've seen? And importantly, I understand that there are concerns on logistics cost increase due to global logistics bottleneck phenomenon. Do you think you can keep the stable logistics cost ratio or further make improvements?
네, HE 부문 보고 TV 시장 수요 전망에 대한 질문에 답변드리겠습니다. 현재, 2024년 전체 TV 시장 수요는 전년 대비 증가하면서 성장세로 전환할 것으로 지금 시장 조사기관에서 예상을 내놓고 있습니다. 그러나 소비 심리 위축이 완전히 해결되기까지는 시간이 다소 소요될 것으로 보고 있고, 큰 폭의 성장을 기대하기에는 어려울 것으로 저희들은 보고 있습니다. 다만, 당사의 주력 제품인 OLED TV 시장의 경우에는 LCD에서 OLED로의 시장 전환 및 OLED 패널과 안정화에 힘입어 2022년 수준의 수요가 회복될 것으로 예상하고 있습니다.
Let me answer your question on HE's outlook on TV demand. According to market research firms, the overall 2024 TV market demand is likely to grow YoY. But because it will take some time for consumer sentiment to fully resolve, it's unlikely to realize significant increases. The demand of the OLED TV market, our main product line, is expected to see a rebound to 2022 levels as the market shifts away from LCD toward OLED and OLED panel prices stabilize.
이에 더불어 경쟁사는 W-OLED를 활용한 제품 라인업 보강으로 OLED TV 판매 확대를 추진할 것으로 예상이 되고 있고, 당사는 OLED TV 그 11년 헤리티지를 기반으로 올해 출시한 투명 OLED TV, 그리고 무선 OLED TV 등 세상에 없는 제품을 지속 선보이면서 차별화된 고객 가치를 제공하는 데 집중하고자 합니다. 얼마 전에 있었던 CES 2024에서 OLED T를 포함하여 OLED TV만으로도 109개의 어워드를 수상하는 등 업계에서 기술력과 제품 경쟁력을 인정받고 있어서, 이러한 프로덕트 리더십을 바탕으로 점진적으로 프리미엄 TV 수요도 성장할 것으로 저희들은 예상하고 있습니다. 이상입니다.
Our competitors are expected to boost OLED TV sales by ramping up their product lineups with wide OLED applied. In response, we will continue unveiling some world first, like the first transparent TV we launched this year and the wireless OLED TV, based on our 11-year heritage in OLED TV, focusing on our individualized customer values. We've been recognized through 109 awards in OLED TVs only at CES 2024, like with our OLED TV and other strong industry-leading technologies and products. Therefore, based on this premium TV's leadership, we expect the premium TV demand to grow down the road.
예, 전사 물류비 관련 질문 답변드리겠습니다. 말씀하신 것처럼, 2023년 작년에는-
... 당사가 글로벌 수요 감소 및 경쟁 심화 등 그 어려운 사업 환경이었음에도 불구하고 물류비를 포함한 원가 구조를 안정화해서, 사업 경쟁력 확보 및 영업이익 창출을 지속할 수 있었습니다.
Let me answer your question on logistics costs of corporate-wide operations. As mentioned, despite difficult business environment, including global demand drop and fiercer competition in 2023, LG Electronics was able to continue witnessing operating profits and securing business competitiveness by stabilizing cost structure, including logistics costs.
2024년 물류 현황의 경우, 기본적으로는 투입 선복이 증가하는 데 반해, 글로벌 물동량 회복이 지연되고 있었기 때문에 공급 우위의 구조가 지속되고 있었고, 당사의 재계약 협상도 순조롭게 진행되었습니다. 하지만, 최근 그 중동의 지정학적 리스크, 홍해 지역 통항 이슈죠. 파나마 지역의 가뭄 등의 여파로 인해서 글로벌 물류 환경의 불확실성이 높아지고 있는 건 사실입니다.
Touching upon the logistics status in 2024, basically, more freight space is added to the logistics loop, but the global shipment recovery is showing a flat growth, leading to a supply-centric structure, and contract renewals are taking place smoothly. However, the uncertainties in logistics environment is going up due to Red Sea issues stemming from recent geopolitical risk and drought in Panama Canal.
이에 당사는 운송업체들과의 협상을 통해서 장기계약 조건을 개선하고, 또 권역별로 이 전략 선사를 대표하면서, 또 거기에 이제 선사별로 차별적인 협상을 하는 등의 방법으로 안정적이고 좀 예측 가능한 그 물류 운임 수준을 유지하고자 노력하고 있습니다.
We would like to maintain the logistics freight rates level in a stable manner by taking differentiated approaches to negotiation per shipping companies, especially in case of long-term contracts. Reclassifying strategic shipping companies per region and enhancing long-term contract conditions through negotiations.
또 최근에 이 불확실성 상황에 대한 이 선제적인 대응 방안으로 비상 상황실을 운영하고 있고, 또 대체 운송 루트를 확보하며, 인접 지역의 생산지를 생산 계획 조정을 통해서 대응 체계를 준비하는 등 이 사업 영향을 최소화하기 위한 방법을 좀 강구해 나가고 있습니다.
In addition, as part of taking proactive measures on the recent uncertainties, we would like to operate emergency response center, secure alternative logistics route, and adjust production plans in neighboring production sites so that we can minimize the business impact.
다음 질문 부탁드립니다.
Next question, please.
현재 질문을 요청하신 분은 없습니다. 질문을 하실 분은 전화기 버튼의 별표와 일번을 누르시기 바랍니다.
Currently, there are no participants with questions. Please press star one, star and one to give your question.
더 이상 질문 없으십니까?
현재 질문을 요청하신 분은 없습니다. 질문을 요청하실 때까지 잠시 기다리겠습니다.
Once again, currently there are no participants with questions. We'll wait for a second until there is another question.
네, 추가적인 질문이 없으신 것으로 보입니다. 그럼 이상으로 2023년 사분기 LG전자 실적 발표 콘퍼런스 콜을 마치도록 하겠습니다. 이 시간 이후 추가적인 질문이 있으신 분은 LG전자 IR팀으로 연락을 주시면 자세한 설명을 드리도록 하겠습니다. 감사합니다.
That brings us to the end of LG Electronics earnings release conference call for the fourth quarter of 2023. For further questions, please contact the IR team. Thank you!