Afternoon. Thank you for joining LG Electronics' earnings release conference call for the Q1 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 one on your telephone. I would now like to hand the conference over to the first speaker.
Good afternoon. I am Chang-tae Kim, CFO of LG Electronics. Thank you for joining LG Electronics' earnings release conference call for the Q1 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. I-Kueon Kim from Home Appliance and Air Solutions, Mr. Jeong-seok Lee from Home Entertainment, Mr. Choong-hyun Park, Florian Maag from Vehicle Component Solutions, and Mr. Choong Hwoan Lee from Business Solutions. Also present are Mr. Chang Seok Park from Corporate Business Management Division, Mr. Hong-Su Lee from Accounting Division, Mr. Yong-Joon Kim from Finance Division, Ms. Sooj ung Jung 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 Q1, and outlook for the Q2.
Good afternoon. My name is Won-Jae Park from Investor Relations. Today, I will outline the overall performance results of the Q1 of 2024 and the outlook for the Q2. Next, each division will take turns to deliver its business results and outlook. Then, Ms. Jung 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 Q1 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 Q1 of 2024 and the outlook for the Q2. Consolidated sales of the Q1 was KRW 21.1 trillion, and operating profit was KRW 1.3 trillion.
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 Q1 performance of each business. H&A recorded KRW 8.6 trillion in sales, KRW 940.3 billion in operating profit, and 10.9% in profitability. HE recorded KRW 3.5 trillion in sales, KRW 132.2 billion in operating profit, and 3.8% in profitability. VS recorded KRW 2.7 trillion in sales, KRW 52 billion in operating profit, and 2% in profitability.
VS recorded KRW 1.6 trillion in sales, KRW 12.8 billion 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 Q1. 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 585.4 billion in net income. Next on cash flow. Q1 cash flow from operating activities was negative KRW 80.1 billion, and cash flow from investment activities was negative KRW 1.5 trillion. Accordingly, net cash flow was negative KRW 1.53 trillion.
When reflecting cash flow from financial activities of KRW 48.3 billion, cash balance at the end of Q1 decreased KRW 1.48 trillion from the previous quarter to stand at KRW 7 trillion. Next is the key financial position and indicators for the Q1 of 2024. As of the end of the Q1, assets stood at KRW 61.4 trillion, liabilities at KRW 36.9 trillion, and equity at KRW 24.5 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 Q2. 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 Q1 results and Q2 outlook by business. We will start with H&A. Let me share the Q1 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 appliances 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 Q1 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 Q2. 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 Q1 results of VS. 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 was some cost pressure due to increased headcount, especially with R&D recruitments 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 Q2.
Growth in global demand for automotives 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 bases for profitability by optimizing operations considering market risks and enhancing efficiency in resource management. I will share the Q1 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 Q2. IT demand is expected to maintain similar levels as last year until the second half, and 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 TROMM Objet 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 DUALCOOL, 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 AAA+ 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 Refrigeration Institute for the seventh year in a row. The award was bestowed after going through a rigorous evaluation process by the AHRI, and we received acknowledgment 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 TÜV 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 content, continued to record rapid growth based on an enhanced business base and is expected to reach a KRW 1 trillion level in annual sales this year. 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 financial 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 Q1 results and Q2 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.
지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 *와 1번을 누르시기 바랍니다. 질문을 취소하시려면 *와 2번을 누르시면 됩니다. 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 number star one. For cancellation, please press star two, star, and two on your phone. 처음으로 질문해 주실 분은 Bank of America의 Simon Woo 님입니다.
The first question will be presented by Simon Woo from Bank of America. Please go ahead with your question.
예, 질문 기회 주셔서 감사합니다. 우동재입니다. 먼저 좋은 실적 이렇게 내주셔서 감사드리고요. 첫 번째 질문은 H&A 에 관련된 건데요. 요즘 AI가 워낙 tech 업계에서 중요해서 그런데, 우리 가전에서의 AI 전략과 차별화 요소가 무엇인지 궁금하고요. 향후 이거에 대한 영향, 전망에 대해서 말씀해 주시면 감사하겠습니다. 그리고 두 번째 질문은 VS에서 전기차 시장에 대한 수요 현황 전망, 경영진께서 어떻게 보시는지 하고요. 특히 투자자들 입장에서 시장 성장률이 둔화되는 것에 걱정이 있는 것 같거든요. 그래서 이에 대한 우리 LG전자의 대응 전략이 무엇인지 공유해 주시면 감사하겠습니다.
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 business solution business, vehicle solution business, excuse me. 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. So what kind of responsive measures do you have in LG's business perspective?
먼저 가전에서의 AI 전략을 H&A의 본부에서 먼저 답변드리겠습니다. 자사는 2011년부터 Wi-Fi를 적용했고, 2017년 인공지능 브랜드 ThinQ를 출시했습니다. 그리고 2022년 1월에는 고객이 원할 때마다 신기능을 업그레이드해 주는 업가전을 선보이면서 남들보다 먼저 AI 가전을 선보이고 있었습니다. 아시는 바와 같이 올해 CES에서 인공지능 AI의 의미를 사용자를 더 배려하고 공감하여 보다 차별화된 고객 경험을 제공한다는 의미에서 공감 지능으로 재정립했습니다. 단순한 AI가 아닌 고객을 더 심층적으로 이해하고, 고객들이 실질적으로 체감할 수 있는 다양한 서비스를 제공하고 있습니다.
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 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 CES, 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 goes beyond just artificial intelligence to delivering a wide range of services that customers can actually enjoy.
이러한 말씀드린 공감 지능 가전은 일부 프리미엄 제품에만 한정하여 탑재하지 않고 전체 가전에 적용할 수 있도록 온디바이스 AI 칩과 OS 기반 플랫폼 설계 및 생태계 구축을 통하여 스마트홈으로의 확장을 시도하고 있습니다. LG전자는 본격적인 공감 지능 가전을 위한 가전 전용 온디바이스 AI 칩과 가전 OS를 자체 개발하였고, 지난해부터 기능과 성능을 향상시킨 차세대 가전 전용 AI 칩을 개발하고 있으며, 지속적으로 AI 칩 라인업을 다변화하고 공감 지능 가전 제품에 확대 적용할 계획입니다.
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 is underway since last year, and we plan to move forward with diversifying our lineup of AI chips to be employed in our affectionate intelligence products.
이러한 공감 지능은 각 제품의 도메인 전문가들이 다양한 제품, 고객, 환경 데이터를 분석하며 인공지능 모델 설계를 고도화해 나가고 있으며, 고객이 인지하지 못하는 상황에서도 고객을 항상 케어하고 있습니다. 또한 생성형 AI를 활용한 음성 서비스를 자사의 AI 허브와 음성 가전에도 탑재하여 공감 지능의 고객 경험을 한층 더 업그레이드할 예정입니다. 이상입니다.
Experts of each product domain are currently analyzing data of various products, customers, and environments 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.
예, VS 본부 답변드리겠습니다. 전기차 시장 수요의 경우 최근 성장세가 다소 둔화되었지만, 미국의 전기차 구매 시 세액 공제, 유럽의 탄소 배출 한도 설정, 그리고 충전 인프라 구축 확대 등에 힘입어 성장세는 지속될 것으로 전망하고 있으며, 중장기적으로는 20%대의 성장률을 유지할 것으로 예상합니다.
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 expansion of charging infrastructure. In the mid to long run, we expect growth rate to be in the 20% level.
예, 당사는 고성장이 예상되는 전기차 구동 모듈 시장에서의 경쟁력 확보를 위해 조인트 벤처 효과 극대화를 통해 중장기적으로 e-Powertrain 통합 모듈 단위의 기술 리더십을 확보하여 드라이브 유닛 및 IPGM 생산 체제를 구축하는 등 제품 경쟁력을 강화하고, 다양한 고객을 확보한 마그나사의 고객 네트워크 적극 활용으로 글로벌 OEM 고객사를 확대하여 중장기적으로 시장 수요 성장률을 상회하는 매출 성장률을 추진하고자 합니다. 이상입니다.
In order to secure competitiveness in the EV driving module market where high growth is expected, we aim to secure technology leadership in e-Powertrain's integrated modules by maximizing joint venture effect, strengthen product competitiveness by establishing production systems for drive units 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.
네, 다음 질문 부탁드리겠습니다.
Next question, please.
다음으로 질문해 주실 분은 다이와증권의 김성규 님입니다.
The following question will be presented by Seong-gyu Kim from Daiwa Securities. Please go ahead with your question.
예, 안녕하세요. 질문 기회 줘서 감사합니다. 저도 두 가지 질문이 있습니다. 첫 번째 질문은 우리 Vehicle Solution 부문에서인데요. 2024년 VS 본부 및 주요 사업, 그러니까 사업 전체랑 사업별 세 가지 사업부의 어떤 매출이나 수익성 전망이 어떤지 좀 구체적으로 알려주시면 감사하겠습니다. 두 번째 질문은 VS 사업입니다. VS 사업 본부 관련해서 아까도 좀 CEO 보고 말씀하셨지만 EV 충전 사업에 대한 어떤 매출 비중과 성장 방향성을 좀 공유해 주시면 감사하겠고요. 그리고 최근 수요 둔화, 그리고 전기차 보조금 혜택 감소 등으로 이런 신규 사업 추진하는 데 좀 차질은 없을지, 좀 그런 환경 변화에 따른 영향이 궁금합니다. 감사합니다.
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 solutions. 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 solutions, 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?
예, VS 본부 답변드리겠습니다. 자동차 수요 감소를 포함한 사업 환경 경영의 불확실성은 올해에도 여전할 것으로 예상됩니다. 하지만 당사는 지속적인 신규 프로젝트 추가 수주를 통해 시장 대비 고성장을 목표로 하고 있으며, 2024년에도 기확보된 수주 물량 기반의 견조한 매출 성장이 가능할 것으로 예상되고 있습니다. 본부 매출의 경우 글로벌 완성차 시장 수요 둔화에 따라 단기 구간 영향을 받을 것으로 예상되지만, 신규 프로젝트 양산과 기존 프로젝트 물량 증가에 따른 전기차 부품 중심의 판매 확대로 전년 대비 성장세는 지속될 것으로 기대하고 있습니다.
Let me answer your first question regarding vehicle solution. Uncertainties in the business, including dwindling demand for vehicles, are 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. Revenue 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.
수익성 측면에서는 1차적으로 증가된 매출 물량 기반의 수익성 개선 효과를 기대하고 있고, 아울러 수년간 내부 수주 역량 강화에 기반한 건전한 수주 활동의 성과로 프로젝트 제품의 믹스가 개선된 부분도 긍정적인 영향이 있을 것으로 생각됩니다. 여기에 더해 2024년에는 SCM 및 생산 효율성 제고 등 오퍼레이션 전반에 걸쳐 보다 적극적인 원가 구조 개선 활동을 전개하여 단순한 물량 증가 효과 외에 추가적인 수익성 개선이 가능하도록 노력해 나갈 예정입니다. 이상입니다.
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 are 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 SCM, and also the production efficiency to further enhance profitability on top of the effect we enjoy from the increased volume.
예, 다음으로 EV 충전 사업 관련 질문 주신 부분 말씀드리도록 하겠습니다. 현재 당사 EV 충전 사업은 아직 초기 단계로 사업별 매출 비중을 구분해서 말씀드리기 어려운 점 양해 부탁드립니다. EV 충전 사업의 성장 방향성에 대해서 간단히 말씀을 드리면, 당사는 빠른 시간 내로 초대형 사업으로 육성하겠다는 목표를 가지고 있습니다. 작년 말 해외에서는 처음으로 미국 텍사스에 생산지 구축을 완료하고 미국 내 신뢰도가 높은 UL 인증을 획득하여 제품 안정성과 제조 기술력을 입증하였으며, 전담 영업 조직을 통하여 신규 고객을 확보하고 유지 보수 서비스에도 만전을 기할 예정입니다. 또한 유럽, 아시아 지역으로도 순차적으로 해외 시장에 진출하여 사업 규모를 확대할 계획입니다.
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 truly substantial 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. A 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.
네, 사업 운영 관점에서 당사는 고객사들의 유지 보수 비용의 절감 방안, 충전기 가동률을 제고할 수 있는 충전기 원격 관리 솔루션, 추가 매출이 가능한 광고 솔루션 등을 제공함으로써 고객사의 안정적 사업 운영을 지원하고자 합니다.
In terms of operation, LCE would like to support stable operation of customers by providing ways to reduce maintenance costs, remote control solutions to increase operation rate, and advertisement solutions that can generate an additional stream of revenue.
네, 또한 EV 충전 고객들이 충전 경험 여정에서 부정확한 충전소 탐색, 긴 인증 대기 시간, 무거운 케이블 사용, 번거로운 결제 과정, 충전 중 고장 등에 대해 불편함이 있을 수 있음을 파악하고, 당사는 이러한 페인 포인트를 해소할 수 있는 다양한 솔루션을 개발하고 있으며, 중장기적으로 충전기 하드웨어 이외의 차별화된 솔루션을 확보하여 충전 솔루션 사업자로 성장하고자 합니다.
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 systems, and failures occurring during charging. By securing differentiated solutions beyond charger hardware, we aim to become a charging solution provider in the mid to long run.
최근 전기차 구매 의사가 강했던 초기 수요층의 감소, 고금리로 인한 구매 심리 위축, 보조금 축소, 충전기 인프라 부족 등 전기차 판매 성장이 둔화하는 모습을 보이고 있으나, 시장에서는 이를 일시적 현상으로 보고 있으며, 전기차 판매량은 중장기적으로 지속 성장할 것으로 예상이 됩니다. 또한 전기차 수요 감소의 주요 원인 중의 하나가 충전 인프라 부족이므로, 충전기 자체에 대한 성장은 지속될 것으로 전망이 됩니다. 이상입니다.
Sales growth of 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. The market, however, sees it as a temporary phenomenon, and EV sales volume is believed to continue to rise in the mid to long run. The charging business is also expected to grow continuously as decreasing demand for EVs results in part from the lack of charging stations.
질문 감사합니다. 다음 질문 부탁드리겠습니다.
Next question, please.
다음으로 질문해 주실 분은 대신증권의 박강호 님입니다. The following question will be presented by Kangho Park from Daishin Securities. Please go ahead with your question.
네, 질문 기회 주셔서 감사드립니다. 저는 두 가지입니다. 전사와 HE 부분입니다. 전사 부분은 최근에 달러와 공모 채권을 발행한 것으로 알고 있습니다. 이 공모 외화 채권이 2007년, 17년 만에 발행된 것으로 알고 있는데요. 추진하게 된 배경이 어떤 요인이 있는지 좀 코멘트 좀 부탁드리겠습니다. 두 번째 HE입니다. 올해 들어오면서 webOS에 대한 중요성과 성장성을 많이 언급하고 계시는데요. 현재 webOS의 수익 모델이 어떻게 구성되어 있고, 모델별의 매출 비중이나 이익률에 대해서 궁금합니다. 가능하시면 공유 부탁드리겠습니다. 감사합니다. 네, 채권 발행에 대해서.
I have two questions. One for corporate-wide operation and the other for home entertainment. First, corporate-wide operation. LGE issued a dollar-denominated public bond in April, and this was the first global bond deal in 17 years. What is the backstory? 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?
글로벌 펀드는 CF 보고서 직접 대답해 주시면 좋을 것 같습니다.
네, 채권 발행에 대해서 말씀드리겠습니다. 당사는 국내외 자본 시장에서 다양한 조달 소스로 자금을 조달해서 그렇게 해서 조달 경쟁력을 유지해 오고 있습니다. 그동안 외화 차입은 은행 및 사무 채권을 통해서 조달해 왔지만, 조달 경쟁력 강화를 위해서 달러 공모채 시장도 주시하며 시장을 점검해 왔었습니다.
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 bonds. We have maintained funding competitiveness based on diverse sources in domestic and international capital markets. 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.
미 연준이 긴축 정책으로 방향을 전환한 이후에 글로벌 달러 강세 및 미국의 고금리 장기화에 따라서 은행을 통한 외화 차입과 사무 채권 발행에 대비해서 달러 공모채 발행을 통한 외화 조달이 보다 유리한 것으로 확인이 되었고, 당사의 성공적인 사업 전환에 따른 실적 호조하고 견조한 재무 안정성 등으로 해외 투자들의 관심도 증가하고 있음이 파악되어서 4월에 글로벌 펀드 발행을 추진하게 되었습니다.
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 global public bonds in April.
미국의 금리 인하 기대감 후퇴하고 중동 분쟁 심화 등으로 채권 발행 환경이 우호적이지 않았음에도 불구하고 글로벌 투자자들과의 적극적인 커뮤니케이션 활동을 통해서 총 339개 투자자로부터 최대 오더북 기준으로 94억 불의 투자 주문을 받았었고, 3억 불의 ESG 펀드를 포함해서 총 8억 불의 글로벌 펀드를 성공적으로 발행할 수 있었습니다. 언론 보도 등에 따르면 이번 당사의 성공적인 채권 발행은 해외 자본 시장에서 LG전자의 위상과 명성이 실질적인 투자 유치를 통해 확인되는 좋은 계기였다는 평가를 받고 있습니다.
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. 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 evidence of our strong position and reputation in the global capital market.
네, 이어서 웹OS 관련된 질문에 대해서 답변드리도록 하겠습니다. 당사의 웹OS 기반 플랫폼 사업의 수익 모델은 크게 세 가지로 구성되어 있다고 말씀드릴 수 있겠습니다. 각 수익 모델별로의 비중이라든지 이익률에 대해서 정확하게 말씀드릴 수는 없으나, 가장 비중이 큰 수익 모델은 CTV 기반의 광고 사업입니다. 3,000여 개의 LG 채널을 통해서 고객에게 양질의 엔터테인먼트 콘텐츠를 제공하고 있습니다. 그리고 이러한 콘텐츠를 무료로 즐기는 과정에서 고객의 분석을 통한 맞춤형 광고를 제공하고 있으며, 이러한 맞춤형 광고는 광고주에게는 타겟 고객에 대한 접근성이 획기적이고 높은 양질의 광고 기회를 제공하고 있어서 고객에게는 관심 분야에 맞는 광고 정보를 제공할 수 있는 사업 모델입니다.
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 LG 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.
또 다른 하나 주요 수익 모델은 콘텐츠 사업입니다. 글로벌 유수의 콘텐츠 파트너사들과의 전략적 제휴로 경쟁력이 있는 콘텐츠를 제공하고 있습니다. 기존에 있는 스마트폰과 같이 TV가 OTT를 포함한 엔터테인먼트 콘텐츠 소비의 또 하나의 플랫폼화 되어가고 있고, 이러한 사업 환경을 적극 활용해서 다양한 사업 확장 방법을 모색하고 있습니다.
Another major profit model will be the content business where we strategically partner on those leading content players to deliver good content. Following smartphones, TVs have become platforms for consumers to enjoy content, including OTT services. We are actively navigating to ride on this opportunity and further expanding the business.
세 가지 중에 마지막 수익 모델은 저희들이 웹 OS를 구동시키기 위한 모듈 부품을 타 TV 제조사에게 판매함으로써 수익을 창출함과 동시에 웹 OS 얼라이언스를 통한 생태계를 확대하고 있습니다. 수익성 수준은 TV 하드웨어 판매 대비 월등히 높으며, 플랫폼 매출 증가에 따른 수익성 기여 확대를 기대하고 있습니다. 그래서 당사는 웹 OS 기반의 플랫폼 사업의 고성장세 지속을 위해 전략적 제휴 강화를 포함한 다양한 노력을 지속하고자 합니다. 이상입니다.
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.
감사합니다. 다음 질문 부탁드리겠습니다.
Thank you. Next question, please.
다음으로 질문해 주실 분은 KB증권의 김동원 님입니다. The following question will be presented by Dongwon Kim from KB Securities. Please go ahead with your question.
네, 질문 기회 감사합니다. 저는 전사와 H&A 가전에 대해 각각 질문드리겠습니다. 먼저 LG전자에서 바라보시는 올해 전반적인 사업 전망과 특별히 성장과 부진이 예상되는 사업이 있으신지 말씀 부탁드리겠습니다. 다음은 H&A 가전 사업의 원재료와 물류비 변동에 따른 올해 수익성 전망을 어떻게 하고 계신지 공유해 주시면 감사드리겠습니다. 이상입니다.
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 logistics costs?
네, 먼저 올해 사업 전망에 대해 말씀드리겠습니다. 글로벌 경제 상황이 불확실성이 지속되는 등 사업 환경상 여러 어려움이 예상되지만, 그동안 저희가 강력하게 추진해 온 사업 포트폴리오의 개선 성과에 기반해서 이러한 외부 환경 변화에 선제적으로 대응을 하고자 하고 있습니다.
Let me first answer your question regarding business projection. Although difficulties in business environments, such as uncertainties in the global economy, are 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.
먼저 주력 사업인 가전과 TV 사업에서는 하반기부터 점진적인 수요 개선이 전망되는 만큼, 혁신적인 신제품 출시와 더불어서 볼륨형 공략과 같은 수요 변화의 다이내믹스에 최적화하여 사업 전략을 실행하고, 구독 가전 및 HVAC 공조 사업, 그리고 웹 OS 플랫폼 기반 서비스 사업 등 신규 사업 모델에서의 매출과 이익 기여 확대를 통해서 전년 대비 매출 성장 및 수익성 개선을 추진할 계획입니다.
Gradual recovery of demand is expected from the second half in home appliances 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 segments. 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.
전장 사업의 경우에도 비록 전기차 수요 성장세가 둔화될 가능성에 대한 우려가 있긴 하지만, 전기차 부품 사업에서의 OEM 거래선 확대를 통해 수주 성장세를 이어가고, 글로벌 경쟁을 선도하고 있는 엔터테인먼트 제품군의 매출 확대와 믹스 개선에 기반해서 높은 수준의 매출 성장을 지속시키고 안정적인 수익성 확보가 가능할 것으로 생각하고 있습니다.
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.
이외에도 해외 시장 진출 등 본격적인 사업화 단계에 들어서는 전기차 충전 사업 등 신사업 영역에서도 의미 있는 성과를 만들어낼 수 있을 것으로 그렇게 기대하고 있습니다.
New business, such as EV charging, which is getting ready to start off, is also expected to produce meaningful results.
원가 구조 등 리스크 관리 측면에서는 전반적인 원재료 비용 수준 및 비용 구조의 안정세는 지속될 것으로 보고 있습니다만, 최근 중동 사태와 같은 지정학적 리스크로 인해서 글로벌 물류 환경의 불안정성과 잠재적인 운송비 증가 가능성을 면밀히 점검하고 있고, 전년부터 부담이 증가하고 있는 LCD 패널 가격의 인상 추세에 대해서도 수익성 영향을 최소화하기 위한 방안을 강구하고 있습니다. 보다 효율적인 글로벌 공급망 운영과 상황 변화에 유연하게 대응하는 생산지 전략의 최적화를 통해서 이러한 리스크를 최소화하고, 시장 내 과도한 유통 제고로 인한 마케팅 비용 추가 집행 등 경쟁 비용이 상승하지 않도록 거래선과의 협업 체계도 더욱 강화해서 전년 대비 수익성 개선을 추진하고자 하고 있습니다. 이상입니다.
Regarding the rise in LCD, in terms of risk management, including cost structure, stability in raw material prices and overall costs is likely to continue. However, we are keeping close eyes on the possibility of an increase in logistics costs 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 systems 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.
네, 그 원재료와 물류비 상황에 대해서 H&A에서 답변드리겠습니다. 먼저 원재료에 대해서 말씀드리면, 2024년 1분기에서는 중국의 경기 부양에도 불구하고 실수요 부진이 지속되었고, 주요 나라의 경기 회복 지연으로 원자재 수요 증가는 미미하였으나, 고유가 및 높은 에너지 비용에 따른 생산자 원가 상승으로 인하여 자사 구매 가격 인상 압박이 있었습니다.
Let me answer your question on raw materials and logistics costs. To begin with, raw material costs, despite China's fiscal stimulus in the Q1 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 costs at product sites due to high oil prices and energy costs have weighed on our company's purchase price.
이런 상황 속에서 당사는 권역별 전략 거래선 재설정을 통한 글로벌 볼륨 통합 내구 및 물류 관세 등 보호 무역주의 극복을 위하여 가격 경쟁력을 보유한 최적 소싱 극대화로 2024년 1분기 원재료비는 전년 동기 대비 소폭 개선되었습니다.
Raw material prices, however, have improved slightly Q-on-Q this Q1 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.
네, 2분기 원재료의 경우에는 이스라엘-이란 전쟁 확산에 따른 유가 상승 영향으로 석유화학 원재료가 모두 상승하였으며, 중국 동 제련소의 생산량 감축으로 구리 가격 또한 많이 상승하였습니다. 당사는 저가의 중국산 소싱 이원화 및 확대 적용으로 가격 레벨링 및 추가 볼륨 내구를 통해 구매 가격 인상을 최소화하고자 진행하고 있습니다.
In the Q2 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.
물류비에 대해서 말씀드리겠습니다. 1분기의 경우 홍해 이슈로 인한 해상 운임 상승이 일부 있었으나, 당사는 기체결한 해상 운송 재계약 성과 및 글로벌 생산지 최적화 대응을 통해 손익 영향을 최소화하였고, 다행스럽게도 4월부터는 선복 상황의 개선과 선사별 운임의 하락 추세가 지속되고 있는 상황입니다. 아울러 글로벌 제2판매 법인들의 트럭 운임은 전년 대비 하향 추세임에 따라 2분기는 전분기 대비 소폭 개선이 예상됩니다. 이에 따라 예상되는 원재료 인상 영향 금액은 물류비 개선 금액으로 상쇄되어서 당사 손익 영향은 크지 않을 것으로 판단하고 있습니다. 이상입니다.
For logistics costs as of Q1 of 2024, shipping rates increased somewhat due to impacts in the Red Sea, but we minimized 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, trucking rates borne by global sales subsidiaries are trending down YOY; hence, in Q2, marginal improvements Q-on-Q are expected. Accordingly, we believe the effects of raw material and logistics costs on our profit will not be as pronounced, but with the offset of possible rises in raw material prices by declining logistics costs. Thank you.
센터장님 질문 감사합니다. 다음 질문 부탁드리겠습니다.
Next question, please.
현재 질문을 요청하신 분은 없습니다. 질문을 하실 분은 전화기 버튼의 별표와 1번을 누르시기 바랍니다. Currently, there are no participants with questions. Please press star one, star and one to give your question.
더 이상 질문이 없으신가요?
Are there any more questions?
현재 질문을 요청하신 분은 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.
끝까지 여긴 질문이 없는 것 같습니다. 그럼 이상으로 2024년 1분기 LG전자 실적 발표 컨퍼런스 코너를 마치도록 하겠습니다. LG전자는 주주 가치 개선을 위한 다양한 방안을 추진하고 있습니다. 좀 지켜봐 주시면 좋겠습니다. 추가적으로 이 시간 이후 질문이 있으시면 LG전자 IR팀으로 연락을 주십시오. 자세한 설명 드리도록 하겠습니다. 감사합니다.
I believe there are no more additional questions, so that brings us to the end of LG Electronics Q1 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.