Good morning and good afternoon. Thank you for joining LG Electronics earnings release conference call for the fourth quarter of 2022. 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 Sang Bo Shim from Investor Relations. Thank you for joining LG Electronics earnings release conference call for the fourth quarter of 2022. With me are representatives of each business management division, Mr. Yi Kwon Kim from Home Appliance and Air Solution, Mr. Jung Hee Lee from Home Entertainment, Mr. Joo Yeong Kim from Vehicle Component Solutions, Mr. Dong Chul Lee from Business Solutions. We are also joined by Mr. Sang Wo Park from Global Business Management Group, Mr. Jung Yeon Park from Corporate Business Management Division, Mr. Hyungji Lee from Finance Division, and Mr. Hongsu Lee from Accounting Division.
Please note that all statements we'll be making today regarding the financial results of the 1st 4th 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 fouth quarter of 2022, and the outlook for the year 2023 and the first quarter. Each division will take turns to deliver its business results and outlook. I will share our ESG activities and achievements.
Let me start with the consolidated financial results of the fourth quarter of 2022, and the outlook for 2023 and the first quarter. Consolidated sales of the fourth quarter was KRW 21.9 trillion, and operating profit was KRW 69.3 billion. Despite sluggish sales in home appliance and TV due to slow demand caused by inflationary pressures in major countries, revenue grew year-over-year on the back of strong sales in vehicle components. H&A and BS remain profitable, but operating profit decreased by a large margin year-over-year due to rising marketing costs entailed by intensified competition in the appliance business as demand for durable goods became sluggish, and increased promotion costs to secure sound inventory levels in TV and IT. I will now briefly review the fourth quarter performance of each business.
H&A recorded KRW 6.4 trillion in sales, KRW 23.6 billion in operating profit, and 0.4% in profitability. HE recorded KRW 4.5 trillion in sales and KRW 107.5 billion in operating loss. VS recorded KRW 2.4 trillion in sales, KRW 30.2 billion in operating profit, and 1.3% in profitability. BS recorded KRW 1.2 trillion in sales and KRW 77.8 billion in operating loss. Later share is 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 212.4 billion in net loss. On cash flow. Q4 cash flow from operating activities was KRW 472.2 billion, and cash flow from investment activities was negative KRW 1 trillion, resulting in net cash flow of negative KRW 1.1 trillion. When reflecting cash flow from financial activities of negative KRW 123.5 billion, cash balance at the end of Q4 came to stand at KRW 6.3 trillion, a KRW 1.2 trillion decrease from the previous quarter. The key financial position and indicators for the fourth quarter of 2022.
As of the end of the fourth quarter, assets stood at KRW 55.2 trillion, liability at KRW 32.7 trillion, and equity at KRW 22.5 trillion. In terms of leverage ratios regarding liability to equity, debt to equity, and net debt to equity, we continue to maintain a healthy financial condition. The outlook for the year 2023 and the first quarter. In terms of the business environment, impacted by the interest rate hike in many countries to suppress inflation and prolonged geopolitical risk in Europe, concerns of an economic downturn are on the rise, and weak demand stemming from declining consumer sentiment is expected to persist for the time being.
As part of our business strategy to overcome this situation, we will respond to changes in market demand in an agile manner by launching innovative and differentiated new products and strategic models to target the volume zone. We plan to secure additional top-line growth in promising business areas such as contents and service platform and B2B businesses. In terms of operations, we will focus on profitability-centered risk management in the first half, and actively respond to possible improvement in demand in the second half to maintain top-line growth momentum on an annual basis for 2023, and also continue to enhance profitability. Our first quarter revenue is projected to decrease year-over-year, impacted by weak demand in appliances and TVs. That said, we expect stable profitability on the back of efforts to improve cost structure and reduce costs.
Let's move on to the Q4 results and outlook for 2023 and Q1 by business. We will start with H&A. Let me share the Q4 results of H&A. We recorded sales of KRW 6.4 trillion, a slight decrease year-on-year, as revenue declined in Korea and overseas markets due to weakening demand for appliances caused by deteriorating macroeconomic conditions. Operating profit decreased year-on-year due to rising fixed cost burdens and marketing costs entailed by intense competition. Next is the outlook for 2023 and Q1. Concerns of an economic downturn are expected to continue to shrink demand for appliances, and subsequently, competition in the market is expected to intensify more than ever. Amid this environment, we will gain top-line growth momentum by proactively responding to shifts in market and consumption trends, such as demand polarization.
We will aim to secure profitability by improving manufacturing cost structure and reducing expenses, including logistics costs. In Q1, we will secure revenue levels similar to that of the previous year by strengthening our presence in the premium segment and driving business in the volume zone. We plan to maintain solid profitability by optimizing spending, including logistics costs and expenses to address competition. I will share the fourth quarter results of HE. Sales declined year-on-year, impacted by the geopolitical risk stemming from the protracted Russia-Ukraine conflict and weakened consumer sentiment due to concerns of a global economic downturn. Operating profit decreased year-on-year due to increased marketing spending to sell out inventory during the peak season. Let me share the outlook for the year 2023 and the first quarter.
In the market, amid uncertainty over global TV demand improvement, competition in the premium product segment is projected to get fiercer. Accordingly, we will lead the expansion of the OLED TV market based on differentiated product competitiveness, strengthen competitiveness in LCD TVs by further applying Quantum Dot NanoCell technology, and capture additional growth opportunities by driving platform-based businesses. In the first quarter, revenue is expected to decrease year-on-year due to slowing global TV demand, but we plan to improve profitability through efficient management of resources. Let me share the fourth quarter results of VS. Sales grew significantly year-on-year, thanks to increased OEM orders on the back of high order backlogs. Despite increased costs from running new production subsidiaries, operating profit continued to be in the black, thanks to revenue growth. Next, the outlook for 2023 and the first quarter.
Amid easing of the auto semiconductor shortage, uncertainties regarding global demand for vehicle components continue to exist in the market due to macro risks, such as the geopolitical situation in Europe. We will maintain high top-line growth and sound profitability by securing more business for high value-added, high performance products based on differentiated product competitiveness and strengthening our presence in the vehicle component market with stable supply chain capabilities and timely action towards additional top-line opportunities. In the first quarter, we will seek to grow the top line through stable supply chain management and continue to be profitable by improving the cost structure. I will share the fourth quarter results of BS. Though we continue to post growth in Information Display, Q4 sales decreased year-on-year, impacted by dampened demand in the global IT market.
Operating loss was expanded against the previous quarter, impacted by the drop in revenue and jump in promotion cost to reduce channel inventory. Let me share the outlook for the year 2023 and the 1st quarter. IT demand is expected to continue on a downward path due to concerns of a global downturn. Information Display is projected to maintain a growing trend, though the pace of growth may be somewhat slower. We will continue to seek revenue growth by strengthening our product lineup with new products and securing more B2B projects by offering tailored solutions for different verticals. We will also focus efforts on preemptive risk management by proactively managing inventory and optimizing spending with the market situation in mind.
In Q1, we will improve profitability and seek to achieve a turnaround by focusing on stabilizing operations through timely action to address the IT peak season and strict management of inventory and spending amid demand contraction in the market. Last but not least, let me share our ESG activities and achievements. As a major ESG management company in Korea, LG Electronics has been playing a leading role in corporate social responsibility. In recognition of our efforts, we continue to receive A grade in 2022 in ESG ratings provided by renowned external institutes such as MSCI and KCGS. In particular, we were included in the Dow Jones Sustainability Index World list for 11 years in a row. DJSI considers not only economic achievements, but also non-financial performance, such as environment, social, governance related practices in its evaluation.
Building on these capabilities and achievements, we presented our ESG vision of a better life for all and six strategic initiatives to achieve this vision at CES in January. To accelerate our actions to mitigate climate change, we established a challenging goal to become carbon neutral by 2030 and to ramp up the use of renewable energy to 100% in our sites around the world by 2050. In terms of products, we also plan to drive and lead ESG efforts by reducing carbon emission of seven major products in the product use stage by 20% compared to 2020 levels, and expanding use of recycled plastics to 600,000 cumulative tons by 2030.
Moreover, we will take action to realize our vision of a better life for all by strengthening ESG risk management across the supply chain, promoting diversity in our organization and culture, and developing products with enhanced accessibility to enable anyone to use them without obstacles. Going forward, LG Electronics will pursue competitive and reliable ESG activities by managing relevant risks and improvement plans across our decision-making process and deriving optimal solutions to create value for all stakeholders through systematic and expert ESG efforts, including the ESG committee. That brings us to the end of the fourth quarter earnings release and outlook for the year 2023 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 and one if you have any questions. Questions will be taken according to the order you have pressed star and one. For cancellation, please press star and two on your phone. The first question will be presented by Jeong Jun Park from JP Morgan. Please go ahead with your question.
Thanks for taking my questions. I have two questions. First, on corporate-wide operations. It's only in a new year. Last year, there were some price issues, such as logistics issues. Was there any effect in improvement of margins? To talk about B2B and B2B, now it seems that B2B guidance is pretty okay, but in terms of B2C, it seems a little bit weak. Can you please talk about this year's corporate-wide revenues and profitability and whether there is any effect in terms of margin? Usually, we have seasonality that is high in the first half and low in the second half. Do you expect our seasonally high earnings in the first half and low earnings in the back half to continue into this year? We usually have this seasonality because we have high proportions of consumer products.
My second question is on BS. What is your outlook on BS divisions, revenues and profitability? Up until 2021, there were some improvements in terms of margin. However, from 2022, now the margin has been falling a little bit. Can you please talk about it?
전사 부분 말씀드리겠습니다. 2023년에도 높은 인플레이션 수준 지속 및 지정학적 리스크, 경기 침체에 대한 높은 우려감 등 사업 환경의 어려움은 계속될 것으로 전망이 됩니다.
Let me answer your question on corporate-wide operations. We expect rising inflation, geopolitical risks, and deep concerns over a slowing economy to continue into 2023.
당사 사업 환경 측면에 있어서도, 원재료 가격 및 물류비 부담 완화, 자동차 부품 사업의 수익성 관점 기여 등, 긍정적 요소도 있는 반면에, 지속적인, 수요 감소 추세 및 이에 따른 경쟁 심화 그리고 마케팅 비용 부담 증가 등 리스크 요인도 병존하는 상황입니다.
In terms of our business environment, while there are positive factors like that of the eased raw material and logistics cost and bigger contribution of our EV component business to our profitability, we also have risks such as prolonged demand declines, subsequent intensification of market competition, and market cost increases.
어, 이러한 환경 속에서 당사는, 어, 상반기에는 컨슈머 수요 둔화 속에서 수익성 중심으로 리스크 관리 집중하고, 어, 본질적 사업 역량 강화를 통해 하반기 수요 개선에 적극 대응하여, 어, 연간 기준 매출 성장을, 어, 지속하고 견조한 수익성을 확보하고자 합니다.
Despite the hurdles, we expect to focus on managing risk, especially to our profitability amidst slowing consumer demand trends in the first half of this year, and to prepare for demand improvement by ratcheting up our fundamental business capabilities in the back half of the year to continue top-line growth and secure strong profitability for the year.
어, 질문하신, 어, 물류비하고 원재료 가격에 대해서 답변을 드리면은 당사는 2020년 말부터 시장의 물류비 변동 상황을 반영하여 해상운송 선사와의 재계약을 추진해 왔고, 이의 성과로 2023년에는 상당한 수준의 비용 절감이 가능할 것으로 기대하고 있습니다.
On the logistics and raw material price changes you mentioned. From 2020, there have been changes in terms of logistics cost. We reflected the changes from 2020. Not only that, from the end of 2022, we reflected the changes by renewing our contracts with ocean shipping companies. As a result, from 2023, we expect a significant tailwind in terms our cost savings.
second 질문하셨던 원재료 가격 하락 효과는 도입 시점부터 제품의 생산 및 판매 시점까지, lead time 기준으로 이미 반영이 진행되고 있고, 물류비 인하 효과는 선사별 협상, 완료 시점에 따라 Q1부터 반영될 예정입니다.
On the effect of raw material cost declines, we have already reflected, based on the lead time from product manufacturing to sales. Now we think that the effects will be reflected from the first quarter as we conclude our contracts with ocean shipping companies.
마지막으로 질문하셨던 seasonality 관련해서는, 2022년에도, 상과 저의 seasonality를 좀 기록을 하였으나 올해는, 유통 재고 건전화 추진 그리고 B2B 사업 활성화 등을 통해 분기별 수익성 안정화를 위한 노력을 계속해, 진행할 예정입니다. 이상입니다.
On seasonality, you mentioned our profits in 2022 showed a familiar seasonal trend, high in the first half and low in the second half. This year, we intend to stabilize our quarterly profits by having a sound inventory build and facilitating the B2B business. Thank you.
아, 예. 질문하셨던 BS 본부 매출 및 수익성 전망 말, 답변드리겠습니다. 자, 앞서 실적 발표 때 BS 본부 2023년 전망에서 말씀드린 바와 같이 이십삼년에도 시장 수요 둔화 추세가 지속이 된다면 본부 사업에도 영향이 좀 불가피할 것으로 보입니다만. 하지만 이십삼년 본부 매출 및 수익성은 전년 대비 성장 및 개선을 목표로 구체적인 활동 계획을 수립하여 운영하고 있습니다.
Let me answer your question on BS division's revenues and profitability. As noted in the remarks on the 2023 outlook today, if the slowing demand trend in the market continued into this year, there would be inevitable impacts on our business. With that said, we have set up and are implementing detailed plans for 2023 to improve both revenue and profitability against last year.
매출 측면에서는 신모델 출시 등 포트폴리오 개선과 B2B 프로젝트 수주 확대 등을 통해서 매출 성장 기조를 유지하고, 수익성 측면에서는 경쟁 심화에 따른 마케팅 비용 추가, 원자재 가격 인상 등 리스크가 상존은 합니다. 적극적인 비용 절감 및 원가 구조 개선 노력으로 수익성을 개선해 나갈 계획입니다.
On the revenue front, we will continue to drive revenue growth by improving our portfolio with new models launches and expanding new B2B project orders. On profitability, despite competition-driven risks, such as marketing or raw material cost increases, we aim to enhance our profitability by reducing costs and improving cost structures proactively. Thank you.
네, 다음 질문 부탁드리겠습니다.
Next question please.
다음으로 질문해 주실 분은 키움증권의 김지산 님입니다. The next question will be presented by Ji San Kim from Kiwoom Securities. Please go ahead with your question.
Two questions. My first question is on HE. It seems that setting a price for OLED TVs can be tricky. While LCD panel prices have plummeted, it is unlikely that OLED panel prices will fall. In light of this, what is your price positioning strategy to drive OLED TV demand? Do you have any plans to decrease the ASP this year? My second question is on VS. This year, macro trends for VS are likely to be unfavorable such as declining demand for vehicles and the weakening dollar, unlike your great 2022 performance beyond a turnaround. In such a tough environment, do you have any other profitability improvement plans than the volume ramp-up?
Let me answer your first question on HE.
As you know, LCD panel prices have plummeted. Since LCD panel makers have been adjusting their capacity utilization, I believe that further price drops will be limited. Excuse me. So the gap between OLED panels and LCD panels will be maintained. As a OLED TV market leader for over 10 years, we are going to focus on our competitiveness to provide values to customers. As for the ASP plan, we are going to move in the direction optimized for each region and market by appropriately pricing the products in a way that it will reflect the fundamental value unique to LG's OLED TVs.
In particular, we are going to provide a differentiated competitiveness of our OLED TVs, and especially with our wireless AV connected OLED TV, which is a first in the world, we are going to provide differentiated value to the market, and we are going to maintain a value premium over LCD TVs. Let me answer your question on VS. As you said, the uncertainties surrounding the business environment, such as vehicle demand declines, are expected to continue into this year. Nevertheless, we aim to pursue high growth in the markets by continuously securing more project orders and expect to see robust revenue growth in 2023 based on current backlogs.
On profitability, we also expect improvement driven by the growth of our volume and revenue, in addition to tailwinds from project and pro-product mix improvements, which we've made by strengthening our internal capabilities in regards to winning new orders and to ensuring a sound level of orders for many years.
Moreover, in 2023, we will further enhance our profitability by improving cost structures more proactively across our operations, by improving SCM and production efficiency along with volume ramp-ups. Thank you. Next question, please.
The next question will be presented by Peter Lee from Citigroup. Please go ahead with your question.
Good afternoon. This is Isa Char from Citigroup. Thanks for taking my questions. I have two questions on corporate-wide operations and VS. First, on corporate-wide operations, now FX rates are falling again after reaching a peak in the back half of last year. Has this caused any impact on your profitability? Secondly, on VS, as you are likely to see slower macroeconomic trends into 2023, there are concerns over weak demand for vehicles. What is your outlook on the demand for vehicle component this year? Let me answer your question on corporate-wide operations. When the dollar falls, that could result in some impact on each division's results, depending on the scale of their revenues and purchases based on dollar value. However, on corporate-wide operations, the FX headwinds on our revenues have been only limited based on the stable operations of our business portfolios in each region.
On profitability, the impacts would also be limited as we're able to provide a natural hedge like currency matching with our global operations, in addition to managing FX volatility through various tools. Let me answer your question on VS. The automotive market has recently been recovering from COVID-driven demand slowdown, and its rate of recovery is slower than expected due to the prolonged Russia-Ukraine conflict. To quantify it, a market research firm expects vehicle production to grow by 3.5% year-over-year in 2023, and we expect our vehicle component business to grow beyond that growth as both installations of connected car components and the demand for EV component increase led by high growth within the xEV markets. Thank you. Next question, please.
The next question will be presented by Loco Kim from Hana Securities. Please go ahead with your question.
Thank you for taking my questions. I have two questions. My first question is on H&A. Concerns are being raised about negative revenue growth in 2023. In this context, what is your strategy to protect profitability and what is your target profitability?
My second question is on HE. Driven by shrinking TV demand in 2022, the distribution inventory issue has persisted in the market. What is the current status of your inventory levels? It is my understanding that there has been an increase in your expenses for the normalization of distribution inventory. Could you give us an update on your inventory levels? Considering demand outlook for 2023, what is your inventory management strategy both for customers and channels? Let me answer your question on H&A. Amid concerns over an economic recession and declining demand in the home appliances market, our revenue started to turn negative as you've heard in the beginning of the call, as we have entered Q4 last year.
This tough market environment is expected to continue into 2023, and even if there's a possibility that difficult macroeconomic environments such as inflation and interest rate hikes will ease to some extent after the second half of the year, it will take quite some time for consumer sentiment that has been weakened due to decreased disposable income triggered by inflation to recover. Under these circumstances, we will continue to enhance the competitiveness of our premium products, and at the same time, by expanding our volume zone products that we have been preparing continuously, we are going to work on overcoming the impact of declining demand and maintain growth momentum. On the cost side, we are going to maximize the effects of decreased raw material prices and logistics costs.
Under a contingency plan, we will be carrying out cost-cutting activities to maintain the business structure where sustainable profitability can be secured. Let me answer your second question on HE. In 2022, decreased sales driven by a slowdown in global TV demand have led to increased inventory levels of manufacturers, including us and distributors. In order to normalize the increased inventory levels, marketing expenses of TV makers have increased significantly. Thanks to our detailed and preemptive management of PSI and our efforts to maintain sound inventory levels during peak season, our current inventories are managed at normal levels, which is lower year-over-year. As concerns over an economic recession and slowing TV demand persist, heightened competition within the market is expected to continue. Therefore, sound inventory management as a strategy to protect profitability will become increasingly important this year.
Our goal is to maintain the current level of inventory by closely cooperating with distributors to improve the accuracy of demand forecasts, and we aim to continuously maintain sound inventory levels by developing product and sales plans that are aligned with actual sales. Next question, please.다
음으로 질문해 주실 분은 대신증권의 박강호 님입니다. The next question will be presented by Kang Ho Park from Daishin Securities. Please go ahead with your question.
안녕하세요. 대신증권의 박강호입니다. 질문 기회 주셔서 감사드립니다. 저는 질문 two 개 드리겠습니다. HE 본부와 H&A 본부입니다. 먼저 HE 본부인데요. LG Display가 이제 LG LCD 패널 관련해서 이제 사업 중단 및 구조조정을 이제 발표를 하고 현재 진행되고 있습니다. 이러한 내용들이 저희 LG Electronics의 TV 사업 전략에 변화가 생길 수 있는지 좀 궁금하고요. 또한 일부 시장에서는 OLED 생태계가 위축되는 것이 아니냐, 그런 부분도 좀 갖고 있습니다. 혹시 LG Electronics의 입장이 어떤 것인지 좀 코멘트 부탁드리겠습니다. 두 번째는 H&A 본부입니다. 아까 질문 중에 말씀하신 것처럼 올해 H&A 본부에서 물류비 개혁으로 인해서 상당히 수익성 개선이 기대되고 있습니다. 혹시 그 2022 대비 올해 2023에 물류비 개혁 조건이 좀 긍정적으로 어떠한 부분이 많이 바뀌었는지, 좀 작년 대비 계약 기준 가격이 좀 어떠한지 좀 공개가 가능하시면 코멘트 부탁드리고요. 이것으로 인해서 올해 이 H&A 사업부의 마진 개선이 얼마 정도 저희가 힘으로 얻을 수 있는지 좀 부탁드리겠습니다. 감사합니다.
Thank you for taking my questions. I have two questions. My first question is on HE. Will your TV business strategy be affected by LG Display's decision to close its LCD panel business? What is your response to the market's concerns over the possible shrinkage of the OLED TV ecosystem? Please comment on this, if possible. My second question is on H&A. As mentioned before, we have high expectations for the improved profitability in terms of logistics costs. I'm wondering how have the terms and conditions of the logistics contracts changed compared to the past, such as contract rates or contract period, and how much will it contribute to H&A's margin improvements this year?
HE 답변드리도록 하겠습니다. 이미 알고 계시지만 당사는 OLED TV를 중심으로 한 프리미엄 시장 지위 강화와 소프트웨어 중심의 체질 변화 가속화를 통하여 TV 사업의 질적 성장을 지속해 나가는 전략을 수립하고 지금 진행하고 있고, 여기 이러한 전략은 변함이 없습니다.
Let me answer your first question on HE. As you may well know, we will continue our strategy to pursue the qualitative growth of our TV business by solidifying our presence in the premium market led by OLED TVs and accelerating our efforts to change the fundamentals into more software-oriented.
TV 수요 둔화로 인한 LCD 패널 공급 과잉 상황하에서 패널 업체들은 추가적인 가격 하락 방지 및 수익성 방어를 위한 탄력적 가동률 운영 기준을 유지할 것으로 예상하고 있습니다.
Amid an oversupply of LCD panels stemming from slowing TV demand, panel makers are expected to maintain flexibility in capacity utilization in order to prevent further price drops and protect profitability.
이에 당사는 LG Display 외에도 다수의 패널 업체들을 확보하여 LCD 패널 공급망을 최적화하고, 시장 상황을 사전에 센싱하여 계획된 물량 공급과 프리미엄 중심 전략 실행에 차질 없도록 진행하고 있으며, 계속할 계획입니다.
In response to this, we are going to work on sourcing from multiple panel suppliers other than LGD, and we are going to improve the supply chain management, and we will make sure that we meet our supply plans and that our strategy to focus on premium products remain on track.
LG Display가 TV용 LCD 패널 생산을 중단하고 OLED로의 전환을 가속화하는 전략은 OLED 생태계를 오히려 확대할 것으로 저희들은 판단하고 있습니다.
We believe that LGD's shift from LCD to OLED, we believe it could have a positive impact on the expansion of the OLED ecosystem.
TV 수요 역신장 기조에도 불구하고 경쟁사의 OLED 시장에 대한 본격적 진출로 인해서 OLED TV 시장은 여전히 성장세를 유지하고 있습니다.
Even as overall demand for TVs is falling, the OLED market remains strong with our competitor entering the OLED market.
LG Display가 하이엔드 제품 중심의 체질 개선을 통한 규모의 경제 확보 시에 당사 또한 안정적인 OLED 패널 공급망을 기반으로 OLED TV 경쟁 구도 변화에 대응하고 프리미엄 경쟁 우위를 구축할 수 있을 것입니다. 세트 차원에서의 본질적 가치를 제고하고 차별화된 고객 경험을 확대하여 LG OLED TV만의 가치를 지속적으로 제공할 계획입니다. 이상입니다.
Once LG Display improves their fundamentals to become more high-end oriented and thus create economies of scale, we will also be able to deliver differentiated customer experience unique to LG OLED TVs to more customers by adding fundamental value to our products based on a more stable supply of OLED panels.
네, H&A 말씀드리겠습니다. 2023년도 물류비 계약 협상은 2022년도 하반기 이후 지속적으로 하향 안정세를 보이고 있는 해상 운임 수준 등 시장 상황을 반영하여 당사의 원가 구조에 실질적인 개선이 가능하도록 많은 노력을 기울였습니다. 중단기 계약 구조에 따른 운임 수준의 차이는 있으나, 전반적으로 시장 가격 변동을 충분히 감안한 수준으로 인하 폭을 반영하여 해상 운임 경쟁력을 확보하였습니다.
Let me answer your second question on H&A. Market conditions, including falling ocean freight rates since the second half of 2022, were reflected in the negotiations for the logistics contracts for 2023, and substantial efforts were made to meaningfully improve our cost structure. Although freight rates may differ depending on whether the contract is short-term or medium-term, the rate decreases have been reflected to secure competitiveness in ocean freight rates after sufficiently taking into account the volatility in the market.
신규로 계약된 운임은 당장 2023년 1월부터 적용이 되고 손익 개선에 많이 기여될 것입니다. 또한 해상 운임뿐만 아니라 트럭 비용 역시 글로벌 수요 감소로 가격 인하 추이를 보이고 있으며, 채화료와 창고 간 이동 비용과 같은 코로나 팬데믹 기간에 발생한 물류비 효율 항목도 2023년에는 정상화될 것으로 기대하고 있습니다.
The new rates are applied as of January 2023, which will contribute to P&L improvement. Not only ocean freight rates, but also trucking rates are declining due to weakening demand. Logistics inefficiencies, such as demurrage and costs associated with moving from one warehouse to another that we experienced during the pandemic, are expected to be eliminated in 2023.
이러한 그 물류 비용 절감 노력의 재무적 개선 효과에 대해서는 비록 그 글로벌 수요 축소 등 외부 환경 요인에 따른 불확실성이 일부 있습니다마는 구체적인 숫자보다는 2021년 이전, 그러니까 코로나 팬데믹 이전 상황에 근접하는 수준의 원가 구조 개선을 기대하고 있다, 이렇게 말씀드릴 수 있겠습니다. 이상입니다.
Although uncertainties remain amid challenging macro environment, including global demand slowdown, we do expect our cost structure to improve to close to pre 2021 levels.
Okay next question please.
Next question please.
다음으로 질문해 주실 분은 Bank of America의 우동제 님입니다. The next question will be presented by Simon Wu from Bank of America. Please go ahead with your question.
예. 질문 기회 주셔서 감사합니다. 저도 TV 관련해서 질문드리겠습니다. TV가 계속해서 2K, 4K, 8K까지 이제 계속 지나오면, 지나면서 TV당 소비되는 전력 소비가 늘어날 것 같은데요. 특히 유럽에서는 이거에 대한 규제를 좀 한다는 보도도 있는데, 이와 관련해서 우리의 대응 전략이 뭐고 과연 두 가지잖아요. 8K TV가 진짜 중요한 변곡점이 될 수 있느냐 하고, 우리가 8K TV를 많이 만들어 가지고 전 세계에 잘 팔 수 있는지. 이제 규제에 대한 대응 전략은 어떤가? 이게 첫 번째 질문이고요. 두 번째는 우리 LG전자 전사 개념의 CapEx가 작년엔 어땠고, 올해는 또 어떤지. LG Innotek이야 어차피 알려졌으니까 close to KRW 2 trillion 투자를 하고 있잖아요. 오히려 LG전자보다 투자를 많이 하고 계시는 것 같은데, 우리 LG전자, 그 LG Innotek을 뺀, 전사 개념의 작년, 올해 얼마였고, 어디에 집중적으로 투자를 하시는지 설명해 주시면 감사하겠습니다.
Thank you for taking my questions. I have two questions. My first question is related to TV. As you know, TVs have been evolving continuously from two K to four K to eight K. As TVs evolve in terms of resolution, it is only natural that it is consuming more power. Currently in Europe, they are imposing regulations on TV power consumption. I would like to know what is our response to this. As you know, eight K TV can be a critical inflection point for us. I'm wondering how we are going to respond to these regulations being imposed by the European Union. My second question is on corporate-wide operations. What is your CapEx plan for 2022 and 2023? Can you please elaborate on it? It's been already known that Innotech's investment is around KRW 2 trillion, which is even larger than LG Electronics.
Can you please provide that information excluding LG Innotech? Can you also talk about the CapEx for 2022 and 2023? Can you also tell us especially where you're making investment?
네, HE본부 답변드리겠습니다. 당사는 뭐 8K LCD 경우에는 이미 규제 사항에 대해서 알고 있었기 때문에 전력 소모 기준에 부합하는 유럽 에너지 규제에 대한 사전 준비를 모두 마쳤습니다. 당사는 기본적으로 에너지 효율이 좋은 OLED를 주축으로 사업을 운영하기 때문에 큰 문제는 없을 것 같고, 그다음 전력 소모 규제에 부합하도록 전 OLED 모델과 LCD 모델의 개발이 완료되어 지금 출시를 앞두고 있는 상황이 되겠습니다.
Let me answer your first question on HE. In the case of our 8K LCDs, we were already aware of the regulations, so we are fully prepared to meet the EU's energy requirements. For OLED as well, since our OLED business primarily focuses on OLEDs with high energy efficiency, we do not believe we will see any issues or problems in terms of EU's regulations on power consumption.
Let me answer your question on CapEx. As you know, we have made investment of just over KRW 2 trillion on an annual basis based on our rule to set CapEx investment only within our EBITDA. On investment area for 2023, we plan to continue that funding to maintain and strengthen the existing business capabilities to develop an intelligent approach to manufacturing innovation and to achieve digital transformation going into 2023. We'll also continue to invest in identifying new promising areas and diversifying our business portfolio. We expect this year's CapEx to stand at around KRW 2 trillion levels like last year. However, we do plan to minimize unnecessary investments and further the efficiency of our resources amidst changes to our business environment, such as concerns over economic slowdown or slowing global demand, so that we can continue to secure and improve our financial health.
Thank you.
Next question, please.
The next question will be presented by Yumi Cha from Mirae Asset Securities. Please go ahead with your question.
Thanks for taking my questions. This is Yumi Cha. I have two questions on VS and BS. The first one is on VS. How are the backlogs as of the end of 2022? What is your targeted amount by the end of this year? If possible, can you please provide the information by each business? Do you expect any impact on that given the FX rates that are now falling? If so, what do you expect that amount to be? Secondly, can you talk a little bit about BS division's robot businesses progress and plan for 2023? Thank you. Let me answer your question on VS. We recorded a backlog of KRW 80 trillion on the back of a surge of new orders in 2022.
In terms of each business' shares of the total backlog as of late 2022, infotainment took up a percentage in the mid-60s, EV component around 20% and automotive lamp about like mid-10%. In terms of our backlog at the end of 2023, there might be some FX impacts, we are to continue growth momentum with more order intakes down the road and expect the EV component business to continue to take up a larger share of the total backlog in the future on the back of high growth within the EV market and LG Magna's JV effects. Thank you.
예, 저기 BS 본부에 질문하신 로봇 사업 현황 추진 계획 말씀드리겠습니다. 어, 로봇 산업 실태조사에 따르면 국내 서비스형 로봇은 최근 삼 년간 연평균 사십이 프로 이상의 높은 성장세를 보이고 있습니다. 특히 제조 공정용 물류 로봇, 식음료 제조 로봇, 서빙 로봇 등의 도입이 본격화되고 있습니다. 정부에서도 해당 분야에 대한 발빠른 규제 개선을 노력하면서 지속적인 시장 확대가 기대됩니다.
Let me answer your question on BS, on your question about BS division's robot business progress and plan. A survey on the robotic industry found domestic service bots have shown a high 42% CAGR over the past three years. Standouts are logistics robots for manufacturing processes for tending robots and serving bots being rolled out. With the government quickly addressing regulations in the sector, we expect the market to continue its growth trajectory.
이에 당사는 호텔, 병원, Residence, 식음료 등 다양한 Vertical에서 서빙 로봇, 배송 로봇, 물류 로봇, 안내 로봇, 살균 로봇 등으로 사업을 하고 있으며, 특히 고객의 다양한 운영시스템과 결합하여 요구사항을 충족시킬 수 있는 기술 역량을 바탕으로 고객에게 차별화된 경험을 제공할 수 있는 통합 솔루션을 만들어 가고 있습니다.
In response, we have done serving delivery, logistics, guide, and disinfection bot businesses for various verticals such as hotels, hospitals, residences, and F&B companies. In particular, we have made integrated solutions to provide our customers with differentiated experiences based on our technological capabilities to best meet requirements like aligning with their different operating systems.
2022년도에는 전략 거래선 파트너들과의 사업 협력을 통해 배송 로봇 판매 확대, 물류 배송 솔루션 공급 시작 등 주요 성과를 거두었습니다.
In 2022, we expanded our delivery bot sales for strategic partners and kicked off our supply of robotic logistics and delivery solutions, making major achievements.
2023년에도 서빙 로봇 및 물류 로봇 시장은 지속 성장할 것으로 예상되는 바, 각 vertical에 맞는 로봇 기반의 무인 자동화 솔루션을 준비하여 고객들이 LG CLOi를 만나고 경험할 수 있는 장을 넓혀갈 예정입니다. 이상입니다.
Going into 2023, when the serving and logistics bot market is to steadily grow, we will continue our readiness of unmanned and automated solutions based on robots for each vertical so that more of our customers can meet and experience our LG CLOi. Thank you.
네, 다음 질문 부탁드리겠습니다.
Next question please.
현재 질문을 요청하신 분이 없습니다. 질문을 하실 분은 전화기 버튼의 별표와 일 번을 눌러주시기 바랍니다. Currently there are no participants with questions. Please press star one star and one to give your question. 현재 질문을 요청하신 분이 없습니다. 질문을 요청하실 때까지 잠시 기다리겠습니다. Once again, currently there are no participants with questions. We will wait for a second until there is another question.
네, 더 이상 질문이 없는 것 같습니다. 이상으로 2022년 4분기 LG전자 실적 발표 컨퍼런스 콜을 마치도록 하겠습니다. 이 시간 이후 추가적인 질문이 있으신 분은 저희 LG전자 IR팀으로 연락주시면 자세한 설명을 드리도록 하겠습니다. 오늘 참석해 주셔서 감사합니다.
Since there is no more question, that concludes today's earnings call for the fourth quarter of 2022. For further questions, please contact our IR team. Thank you for joining us today.