Good afternoon, and welcome to LG Electronics' quarterly earnings conference call. This conference call will begin with a presentation on the earnings results, followed by a Q&A session. To ask a question, please press star and one on your telephone keypad. Simultaneous English interpretation will be provided for the presentation, followed by consecutive interpretation for the Q&A. Now, I would like to turn the call over to the first speaker.
Good afternoon. My name is Won-Jae Park from Investor Relations. Thank you for joining our earnings call for the third quarter of 2026. With me are Chang-tae Kim, CFO and EVP of LG Electronics from each company's business division, Jong-In Yoo from HS, Sangho Park, SVP of MS, Ju Yong Kim, VP of VS, and Dong-hoon Shin, VP of ES.
From headquarters, Jihwan Park, SVP of Corporate Business Management, Young Kyoon Kim, VP of Finance, Jaemu Lee, VP of Robotics Strategy Division, In Geun Park, head of accounting, and Sung-m in Hong, head of ESG office. This presentation will proceed as follows: Our CFO will review the Q3 2026 results and Q4 outlook, followed by an update on the progress of our new growth businesses. I will then present the third quarter financial highlights.
After that, each business will share its individual results and outlook. Lastly, the head of the ESG office will present the results of our ESG activities. Please note that all statements made today regarding the third quarter financial results are subject to change in accordance with external review. Actual results may differ from today's outlooks and forward-looking statements due to market uncertainties and strategic adjustments. Now, let us begin with the Q3 2026 performance review and the Q4 outlook.
Good afternoon. I am Chang-tae Kim, CFO of LG Electronics. Here are our third quarter results. Consolidated revenue reached KRW 23.8 trillion, and operating income was KRW 781.9 billion, both improving year-over-year. Despite persistent challenges, including the war in the Middle East and rising interest rates in major markets, we continued to grow revenue, supported by our market position and differentiated competitiveness in our core businesses. Home appliances and automotive electronics maintained stable profitability, while TV improved significantly year-over-year, contributing to company-wide profitability. In particular, automotive electronics has maintained solid mid-single digit plus profitability for seven consecutive quarters, establishing itself as a stable B2B-based cash cow. As vehicle connectivity and autonomous driving advance, we will keep expanding the business and develop innovative products to improve our results.
In Q4, uncertainties over interest rates, raw material prices, and exchange rates are likely to persist, with the regional demand diverging further. In response, we will continue to advance our proven strategies of B2B expansion, Global South, and two-track to secure growth momentum. In addition, to strengthen our fundamental cost competitiveness, we will improve the efficiency of our global production by leveraging the manufacturing ecosystem in low-cost countries and diversify our supply chain to build resilience against structural cost changes. Next, I will highlight our progress in our new growth engines and a new opportunity in the AI home solution business. First, in AI data center cooling, tangible results are emerging. At our last earnings release, we reported that first half orders exceeded KRW 600 billion and forecast that the figure would reach several trillion won by year-end.
As reported in the media, we signed a contract with AIR Control Concepts, a leading provider of AIDC infrastructure platforms, to supply cooling solutions for a 5 GW AIDC. Including this contract, cumulative orders as of Q3 exceeded KRW 3 trillion, and our planned order growth is well on track. Given the long-term nature of this agreement, which can provide stable revenue over many years, the market views it as an opportunity for us to strengthen our presence in AIDC cooling. To respond promptly to rapidly growing orders, we are expanding investment in production capacity. Next year, we plan to establish a production hub in Virginia, U.S. where data centers are concentrated with 32,000 sq m of floor area on a 170,000 sq m site, and build new lines in Pyeongtaek and Changwon for a total investment of about KRW 220 billion.
We will expand the capacity in phases as orders grow. We are seeing tangible results in expanding our product portfolio. In addition to chillers and air side products, development and productization of coolant distribution units, or CDUs, the core component of liquid cooling solutions, are progressing smoothly. Recently, we obtained a qualification from NVIDIA for our 600 KW, 1 MW and 2.6 MW CDUs. In addition, our 2.6 MW CDU is now DSX Ready, which signifies compatibility with NVIDIA's AI factory platform. This demonstrates our next generation AI DC technology and positions us for future business. We will continue to lead the development of large-scale CDUs that can manage high-density AI servers in a single unit and accelerate our business by winning more projects. Now let me turn to our robotics business.
Our strategic direction is to establish ourselves as a solution provider across the entire value chain, from key components and hardware to data platforms and operating systems. Actuator mass production preparations are on track. We built a pilot line in Changwon in the first half and will automate equipment and enhance quality in the second half. We expect this to improve our cost and quality competitiveness in robots and secure advantages such as a first-mover position in component standardization. In parallel, we will step up our order-winning activities with potential global customers to deliver tangible business results. In humanoid robot development, we plan to launch LG Data Factory, Korea's largest hub for robot learning and data acquisition in Seoul's Umyeon-dong in Q4.
It will be the starting point for advancing our robot foundation model's performance, built on our domain expertise in manufacturing, home and commercial settings, and a collaboration center for partners in Korea and overseas, including NVIDIA. Next is a new business opportunity in AI home solutions. In partnership with global big tech companies, we are pursuing an AI home solutions business built on cutting-edge IoT technologies. By integrating our manufacturing, AI, and customer-centric IoT hardware capabilities into the AI home ecosystem, we will deliver intuitive solutions with tangible results. Finally, to enhance shareholder value, we plan to cancel all 730,000 treasury shares repurchased this year within Q4. Next year, we will also pursue multifaceted efforts to enhance shareholder value, including additional shareholder returns of around KRW 100 billion. I will now briefly review Q3 2026 performance across the enterprise and each business.
Our consolidated financial results for Q3 were KRW 23.82 trillion in sales and KRW 781.9 billion in operating income. HS recorded sales of KRW 7.04 trillion, and operating income of KRW 259.2 billion. MS recorded sales of KRW 5.02 trillion, and operating income of KRW 146.7 billion. VS recorded sales of KRW 2.82 trillion, and operating income of KRW 190.3 billion. Lastly, ES recorded sales of KRW 2.17 trillion and operating income of KRW 87.2 billion. Next, I will outline the results of our B2B and subscription businesses, the two pillars of our portfolio transformation, which is driving qualitative growth. In Q3, B2B revenue grew year-over-year, driven by automotive electronics, where a solid order backlog supported strong sales, and by commercial displays. B2B also maintained a stable share of total company revenue, reinforcing its role as a key driver of qualitative growth.
In subscriptions, our Korean business further strengthened its competitive edge through differentiated care services while sustaining solid quarter-over-quarter and year-over-year sales growth. For overseas subscription business, our business is also expanding actively into new markets, including the Middle East, in addition to core Asian markets such as Malaysia and Thailand. Although we are still in the early stages of global expansion, we will rapidly build country-specific business infrastructure and capabilities to accelerate the growth momentum of our overseas subscription business. We will continue to strengthen our mid to long-term competitiveness and results by advancing our business portfolio, including B2B and subscription. Next, we look at the income statement and cash flow for Q3. After accounting for financial income and expenses, equity method gains and losses, other non-operating items, corporate tax, and discontinued operations, Q3 net income was KRW 708.4 billion. Now let's look at cash flow.
Cash flow from operating activities was KRW 620.5 billion, while cash flow from investing activities was negative KRW 986.9 billion. After reflecting the foreign exchange impact of KRW -972.2 billion on foreign currency denominated cash, net cash flow was KRW -1.33 trillion. When reflecting a KRW -471.6 billion in cash flow from financial activities, the cash balance at the end of Q3 stood at KRW 8.25 trillion, down KRW 1.81 trillion from the previous quarter. Key financial positions and indicators for Q3 are as follows. At the end of Q3, assets stood at KRW 70.8 trillion, liabilities at KRW 41.2 trillion, and equity at KRW 29.6 trillion. Leverage ratios including liability to equity, debt to equity, and net debt to equity remain at healthy levels.
Now we will hear from each business company regarding its Q3 results and Q4 outlook. We will now begin with the HS business.
Here are the Q3 results for the HS business. Despite persistent uncertainties such as interest rates and FX volatility and a delayed recovery in appliance demand, sales grew year-over-year, driven by growth strategies for our major products, including the two-track and Global South strategies, and by our successful expansion into new sales channels led by subscription, B2B, and online brand shop businesses. We largely contained the cost pressures through structural improvements in operational efficiency, leveraging the low cost country ecosystem. However, operating income declined slightly year-over-year, mainly due to a short-term rise in logistics cost and higher marketing cost to strengthen our brand position. Looking ahead to Q4, we expect demand to diverge, reflecting differences in countries' economic fundamentals between regions affected by persistent geopolitical risks and those benefiting from the rise of AI.
As a result, the recovery in global appliance demand is expected to remain limited. We will strengthen our competitiveness by continuing the two-track strategy, which is proving effective even in the inflationary environment of major markets, and by deepening localization, including by launching regionally tailored products in the Global South, which is posting relatively high economic growth. Let's now turn to the third quarter results for our media solution business. Sales declined quarter-over-quarter, mainly due to seasonality, but grew year-over-year, thanks to stronger premium TV sales, growth in the webOS platform business, and rising demand in the emerging markets. Operating income continued its upward momentum, posting a significant year-over-year improvement driven by a higher share of premium products, lower material costs, efficient use of marketing resources, and other initiatives to enhance cost competitiveness.
Our outlook for the fourth quarter is as follows. Cost pressure continues as prices of core components such as memory and LCD panels rise and supply chain uncertainties persist. With consumer sentiment remaining weak due to high oil prices and interest rates, we expect TV demand to decline year-over-year. In response, we will continue our efforts to strengthen our structural competitiveness, including improving cost competitiveness and operational efficiency. In addition, we will increase investment and strengthen execution to deliver differentiated customer value and secure future competitiveness. I will now review the Q3 results for the VS business. Despite uncertainties in the external environment, such as concerns over slowing EV demand, sales grew year-over-year, supported by stable conversion of our order backlog into sales and solid growth in the infotainment business. Operating income improved year-over-year, driven by sales growth and ongoing improvements in our cost structure and operational efficiency.
Now let me move on to the Q4 outlook. A meaningful recovery in global automotive demand is likely to remain limited given stagnant EV demand and continued uncertainties in the environment. Accordingly, while closely monitoring market changes and their impact, we will sustain our stable sales growth momentum based on a secured order backlog and achieve stable profitability by strengthening cost competitiveness and operational efficiency. I will now review the third quarter result of the ES business. Sales held steady year-over-year, despite weak domestic consumer sentiment and a prolonged slump in the construction sector, as we strengthened our response to commercial HVAC demand in overseas markets such as North America and Europe. Operating income decreased year-over-year, mainly due to lower sales in the Korean market and higher investment in labor cost related to new growth businesses. Let me now move on to the Q4 outlook.
The market environment is expected to remain challenging as uncertainties such as the war in the Middle East persist and competition intensifies. In response, in the Korean market, we will expand customer touchpoints and strengthen our competitive advantage, focusing on subscription and D2C marketing. Overseas, we will pursue accelerated growth by enhancing product and service competitiveness while responding promptly to large-scale AI DC cooling solution projects. Lastly, I would like to talk about our ESG activities and results. We continue to strengthen our competitiveness in eco-friendly, high-efficiency technologies. At this year's Energy Winner Awards, we won 12 awards, including three grand prizes, the most in our industry for the tenth consecutive year. In addition, our OLED TVs earned Carbon Trust carbon footprint certification for the sixth consecutive year, and all our 2026 new models received Intertek's resource efficiency certification.
In the circular economy, we are expanding our end-of-life appliance collection and recycling infrastructure. We built a refrigerant recovery and recycling system with the Ministry of Climate, Energy and Environment and established a logistics and recycling base for appliance collection. Finally, our technological capabilities are recognized in cybersecurity and accessibility. We obtained TÜV Rheinland's qualification as a designated EU cybersecurity testing lab, allowing us to run related tests in-house and reduce time and cost for product development and certification. We are also named to Forbes Global 200 Accessibility Innovators list for improving product accessibility, including the U.S. launch of the Comfort Kit for laundry appliances. Going forward, we will turn our ESG achievements into business competitiveness, leveraging our technology to capture growth opportunities in the AI era.
That concludes LG Electronics' Q3 2026 earnings presentation and Q4 outlook. We will now take your questions. To give more participants a chance to ask, please limit yourself to two questions or fewer. Operator, please open the line.
Now Q&A session will begin. Please press star one, that is star and 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, that is star and two on your phone. The first question will be provided by Simon Woo from Bank of America. Please go ahead with your question.
Thank you for giving me the opportunity to ask a question. My name is Simon Woo. I have a question regarding AIDC and robotics, which LG Electronics is focusing on these days. First, looking at the robotics side, when will this part of the business start to show meaningful results? Also, could you please provide an overall update on your mid- to long-term revenue targets, profitability, and differentiation strategy? The second question is, when we look at LG Electronics' AI DC cooling solution
[Foreign language]
Thank you for taking my questions. I have two questions. One on robotics and the second for ES. I know that AIDC is one of LGE's key business areas. When do you expect the business to begin generating meaningful results, including revenue? What are your mid to long-term sales targets and outlook for profitability? Also, in your view, what differentiated strategies will help LGE achieve these goals?
As for my second question regarding ES, I would like to know in which areas of the AIDC cooling solutions business LG Electronics has the greatest potential to generate value, such as chillers and CDUs. Could you also provide some color on the revenue mix within the AIDC cooling solutions business? How do you expect this mix to evolve over time? Lastly, how will changes in the product mix affect the growth rate and profitability of ES in comparison with your existing businesses such as HVAC and air conditioners?
[Foreign language]
Thank you for those two questions. The first question on our robotics business will be answered by the Head of Robotic Strategy Division, and the second question on AI data center cooling will be answered by the Head of ES Business Management Division.
[Foreign language]
To answer your first question on robotics, our approach is twofold. First, we aim to establish an early lead in manufacturing and logistics while developing our technologies and product lineup and building a track record in markets expected to develop first, including academia, the public sector, and manufacturing, as well as in the early stages of mass production for key components such as actuators. Second, from around 2030, when the humanoid market is expected to take off, we plan to expand into home humanoid robots.
[Foreign language]
Even before the home robot market fully opens up, we are developing home robots and form factors that fit naturally into people's homes, drawing on the strengths we have built in our home appliance business. For the home robot market to gain traction, we believe it is important to reach price points at which consumers would realistically consider buying these robots. We believe our approach of robots designed for appliances and appliances designed for robots can help us achieve this.
[Foreign language]
Lastly, according to global consulting firm BCG, the robotics market is projected to grow from $132 billion in 2031 to $255 billion in 2035, representing a CAGR of 21%. As Physical AI becomes capable of handling a wider range of tasks after 2030, both the B2B and B2C markets are expected to expand. Against this backdrop, we are actively pursuing our goal of becoming a top-tier global player through an agile approach aimed at establishing market leadership. Thank you.
[Foreign language]
Let me answer your question regarding AIDC cooling solutions of ES. From a product portfolio perspective, LG Electronics AIDC cooling solutions business currently generates revenue primarily from chillers. Going forward, we plan to continue expanding the business based on our chiller competitiveness, while broadening our product mix to include liquid cooling products such as CDUs and air side products such as FWUs.
[Foreign language]
Over the medium to long term, we plan to expand our business beyond the supply of individual products to integrated cooling solutions that encompass the design, control, and maintenance of the entire cooling system. As a result, we expect our current chiller-centric revenue mix to become increasingly more diversified over time. In terms of our regional expansion strategy, we are broadening our geographic footprint beyond the U.S., which is our largest market in terms of demand, into other regions, such as the Middle East and Asia.
[Foreign language]
If we continue to make steady progress in expanding our product portfolio, establishing ourselves in an integrated cooling solutions provider, and broadening our regional coverage, we expect to strengthen our market position through accelerated business growth, realize economies of scale, and expand revenue from high value-added products and services. Accordingly, we believe this business will offer significant profitability upside compared with the conventional HVAC business. However, we ask for your understanding that it is difficult to disclose specific medium to long-term revenue targets and the revenue mix by product at this time. Thank you.
[Foreign language]
Next question, please.
[Foreign language]
The following question will be presented by Jongw ook Lee from Samsung Securities. Please go ahead with your question.
[Foreign language]
Thank you for taking my questions. I have two questions, one for FX and one for robotics. My first question for the foreign exchange is that the $1 exchange rate has fallen sharply after holding at around KRW 1,500. Given your global operations, to what extent is this currency movement affecting LGE? Could you walk us through the impact on revenue and on profit loss under the current business structure? Secondly, could you update us on the LG Data Factory and outline its roadmap? Do you have plans to commercialize it, such as through paid pilot projects for external customers? Could you also share an update on your collaboration with NVIDIA and your plans going forward?
[Foreign language]
The first question on the foreign exchange will be answered by the Head of Corporate Business Management Division, and the second question on the Data Factory will be answered by the Head of Robotic Strategy Division.
[Foreign language]
To answer your first question, with transactions in multiple currencies across our global operations, we have a substantial natural hedge against exchange rate movements. A stronger won reduces the won value of revenue denominated in U.S. dollars, euros, and other major currencies. At the same time, it can lower production costs in won terms in countries such as China and Vietnam. As a result, the overall impact on earnings depends on the share of transactions in each currency and how much each currency moves against the won.
[Foreign language]
However, the won's recent strength against most major currencies is somewhat weakening our company-wide hedging efforts.
[Foreign language]
To minimize the impact of exchange rate movements, we plan to continue monitoring our exposure to each currency, further strengthen our global production strategy, including swing production, and refine our FX scenario planning while optimizing pricing by region and improving product mix and cost competitiveness.
[Foreign language]
To answer your second question on robotics. We are planning a range of business models in robotics. These include research products incorporating standalone devices, vertical specific package hardware, software solutions developed with SI partners for the service sector, and data sales and data set development.
[Foreign language]
We are considering paid pilot projects for external customers as a mid to long term opportunity for the LG Data Factory. For now, however, our priority is to use it internally to enhance the performance of our own robots. We will share further details on our plans for external commercialization as the business model takes shape.
[Foreign language]
We continue to work with NVIDIA to advance our technologies using Reference robots. Drawing on the domain expertise we have built in home and manufacturing environments through our existing businesses, we are rapidly collecting Real World Data in environments that closely replicate actual operating conditions. We are also collaborating with NVIDIA across a broad range of Physical AI technologies, including simulation, World Models, and robot development platforms. By combining Real World Data and synthetic data, we are building a virtuous data cycle and aim to accumulate approximately 500,000 hours of training data by year-end. Thank you.
[Foreign language]
Next question, please.
[Foreign language]
The following question will be presented by Junseo Park from Mirae Asset Securities. Please go ahead with your question.
[Foreign language]
Hi. Thank you for taking my question. I actually have two questions. One for HS and one for MS. As for my first question regarding HS, it seems to me that Chinese home appliance brands are expanding their product portfolios into premium products and strengthening their positions in overseas markets. I would really appreciate your assessment of the competitive landscape involving your competitors in terms of your market position as well as differentiation strategies.
My second question is for MS. LCD panel manufacturers appear to be seeking price increases. Could you walk us through the following? First, the outlook for LCD panel prices. Second, the impact on the cost and profitability across key products including TVs, monitors, and laptops, and how you plan to respond forward.
[Foreign language]
Thank you for your questions and thank you for your efforts to assign the relevant people to answer your questions. That was really convenient for me. The first question will be answered by the head of HS Business Management Division, and the second question will be answered by the head of MS Business Management Division.
[Foreign language]
Let me answer your question for HS regarding the competitive landscape. In the first half, our overseas market share improved meaningfully relative to Chinese competitors. This was primarily driven by our strengthening competitive advantage over Chinese players, particularly in North America, as well as market share gains across major U.S. retail channels. We also believe that the underperformance of our traditional competitors, as well as their restructuring and business realignment due to deteriorating profitability, are creating new business opportunities for us and contributing to the strengthening of our market position.
[Foreign language]
Meanwhile, the competitive landscape is changing. It is largely driven by increased collaboration among global players, including Chinese companies in the U.S. market. In addition, Chinese retailers are strengthening their presence in Europe. As a result, competition is expected to intensify further.
[Foreign language]
We intend to further improve our competitive position by simultaneously raising barriers to entry in the premium market and expanding our market share in the mass market segment, all while responding swiftly to market demand. Thank you.
[Foreign language]
To answer your second question on panel prices. We expect LCD, TV, and monitor panel prices to remain stable to slightly higher in the fourth quarter of this year, with upward pressure intensifying from the first quarter of next year. This reflects rising manufacturing costs, production cuts by panel makers, and their efforts to raise prices. Growing demand for larger TV panels is also expected to contribute to higher prices.
[Foreign language]
Higher panel prices are expected to put upward pressure on manufacturing costs for our key products. Profitability could come under greater pressure, particularly in the entry-level and mid-range segments, where intensifying price competition limits our ability to reflect cost increases in selling prices.
[Foreign language]
To minimize the impact of higher costs, we are closely monitoring supply and demand conditions and panel price trends while diversifying our suppliers and optimizing procurement timing. We will also strengthen strategic partnerships with key panel makers to secure a stable supply and continue to enhance our cost competitiveness over the mid to long term.
[Foreign language]
In response to rising prices of key components, such as panels and memory chips, we are pursuing cost reduction initiatives, including optimizing component specifications and dual sourcing while improving supply chain efficiency. We also plan to manage pricing in line with market conditions while improving our product mix through increased sales of premium products and reducing costs associated with price competition. Thank you.
[Foreign language]
Next question, please.
[Foreign language]
The following question will be presented by Hyungwoo Park from SK Securities. Please go ahead with your question.
[Foreign language]
Hi, thank you for taking my question. I have two questions. One for HS and one for VS. First, I would like to ask my questions from multiple perspectives. My first question is regarding container freight indices, which have been recently rising while prices of raw materials, including memory chips, also appear to be continuing their upward trend. To what extent are these factors affecting your profitability, and what is your outlook for the fourth quarter of this year and for next year? I would also appreciate an explanation of how LG Electronics plans to respond. Next, as for VS, could you share LG Electronics' medium to long-term strategy for ADAS, which is emerging as a cash cow business? Also, how do you view the current state of the chasm in the global EV market and its future development?
Lastly, how do you see this affecting LG Magna e-Powertrain's business prospects, and what are the current utilization rates of the new plants in Mexico and Hungary? Thank you.
[Foreign language]
The first question regarding costs will be answered by the head of HS Business Management Division, and the second question regarding the automotive electronics business will be answered by the head of VS Business Management Division.
[Foreign language]
Let me address your question for HS regarding freight rates, raw material price increases, and our responses. First, ocean freight rates remain elevated due to geopolitical risks, port congestion, and adjustments in shipping capacity. In particular, the escalation of the conflict in the Middle East and imbalances in shipping capacity supply and demand resulted in additional costs in certain regions. This raises concerns that logistics costs may take somewhat longer to stabilize than we had previously anticipated.
[Foreign language]
However, from November onward, upward pressure on freight rates is expected to ease as peak season demand moderates and maritime congestion normalizes over time. Market research firms also forecast a gradual stabilization of logistics cost indices. Furthermore, supply-demand imbalances in the shipping market are expected to gradually ease in the coming year as newly built vessels enter service, increasing shipping capacity and helping to reduce transportation lead times.
[Foreign language]
In response, we plan to secure stability in freight rates and shipping capacity through long-term contracts with selected shipping lines. In addition, we also seek to reflect changes in market freight rates in a timely manner through ongoing bidding and contract renegotiations when freight rates begin to decline. In addition, we will level production volumes and align shipping operations accordingly. By doing so, we plan to minimize the impact of freight rate fluctuations and establish a more stable supply system by securing inventory ahead of the next peak season. Thank you.
[Foreign language]
Let me answer your question for VS on our mid to long-term strategies for ADAS. In response to the trend toward integrated automotive electronics architectures and the advancement of autonomous driving, VS is expanding into the HPC segment for IVI and AD/ADAS. To support this, we are leveraging the capabilities we have built through our existing in-vehicle infotainment business. To further strengthen the business capabilities and competitiveness needed to drive this expansion, we are pursuing various strategic initiatives. These include enhancing our in-house capabilities and exploring external partnerships to secure key technologies and solutions. Through these efforts, we aim to sustain growth in the key areas of the future automotive electronics market.
[Foreign language]
Secondly, in the short term, global EV market growth differs across regions due to the EV chasm, as well as differences in local policies and demand conditions. In response, automotive OEMs are flexibly adjusting their electrification strategies and product lineups in line with market conditions. As a result, market growth has been slower than originally anticipated. Nevertheless, we expect the trend toward electrification to continue in the medium to long term, thereby enhancing the growth rate of the EV market.
[Foreign language]
In response to these market changes, LG Magna has broadened its product portfolio beyond the BEVs to cover a wider range of electrification segments, including HEVs. It has also diversified its customer base, which was previously concentrated in North America by adding Korean, other Asian and European OEMs. With these efforts, LG Magna is expected to achieve stable growth if the pace of electrification gradually recovers. In line with its expanded product portfolio and diversified customer base, LG Magna's Mexico plant, which began operations in September 2023, has undergone continuous ramp-up and has now entered a stable production phase. The plant currently accounts for more than 40% of total sales, contributing to improved business performance. Meanwhile, LG Magna's Hungary plant will serve as a key production base to support European OEMs' efforts to localize their value chains. Preparations are progressing as planned, with mass production targeted for February 2027.
Thank you.
[Foreign language]
Next question, please.
[Foreign language]
Currently, there are no participants with questions. Please press star one. Star and one To give your question.
[Foreign language]
It seems that we don't have any further questions for today's call. With that, we conclude LG Electronics third quarter 2026 earnings conference call. Should you have any further questions following today's call, please contact the LG Electronics IR team, who will be happy to provide additional information. The weather is getting chillier, especially at night, so please take care and stay healthy. Thank you for your participation.