The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: John Park - Daishin Securities Co. Ltd., Research Division - Analyst
: [Interpreted] I have 2 questions, one for MC business and the other for Home Entertainment business. With the withdrawal of Mobile business at
the end of July, we believe that the expenses related to human resources and R&D and others are likely to be transferred to other businesses. Can
you share with us the estimation of the size of that expense?
My second question is about Home Entertainment business. In the first quarter, the LCD panel price was quite high, and we believe that this trend
will continue to be sustained into the second quarter. So can you give us your estimation of the profitability regarding these changes?
And also, we believe that the sales percentage of OLED TV is increasing in your business. Can you give us the estimation of the trend of the percentage
of LCD TV and OLED TV sales?
Unidentified Company Representative
[Interpreted] Let me give your -- let me give answers to your first question regarding Mobile communication business. Please understand that I
cannot share with you exact estimation of cost structure at the current moment.
Our principle is to make sure that each individual can get reassigned to the divisions they prefer. And in order to secure our future business value
of LG Group and competitiveness of the business, we plan to reassign resources to different affiliates or different divisions within LGE. By doing so,
we will be able to maintain job security.
The cost amount will be determined based on how many resources will be transferred to each business. But the reassignment hasn't been completed
yet so we cannot share with you any specific amount. However, we do believe that the cost demand is not going to be too big to burden the
financial structure of each business.
Let me answer from home entertainment side. Due to the coronavirus pandemic, we are seeing a rise of trend called home economy. And accordingly,
demand for LCD -- demand for display product is rising rapidly. And as a result, we have seen a rapid increase of LCD panel price.
To response to this risk, our -- we plan to maximize our sales of OLED TVs, NanoCell TVs and large screen TVs, just as we have done in the first
quarter. By doing so, we'll be able to maintain a stable profitability in the second quarter.
Regarding your second question of the sales percentage of OLED TV, unfortunately, I cannot share with you specific numbers. However, to give a
rough idea, we are seeing 10 to 8 percentage point of increase year-on-year, and the percentage of OLED TV sales continues to increase.
Question: Dongwon Kim - KB Securities Co., Ltd., Research Division - Analyst
: [Interpreted] I have 2 questions. First, on HE, and second, on VS. I'd like to ask about the shipment volume of OLED TVs and your projections with
regard to profitability in order to be the leader in the market. And if you have any marketing or product strategy, please share them with us. I'd
appreciate that.
And my second question is on VS. Please share with us your projections with respect to the amount of business that the JV with Magna will bring
Question: Jong Wook Lee - Samsung Securities Co. Ltd., Research Division - Analyst
: [Interpreted] I have 2 questions on H&A. My first question relates to your rental and online business. With diversifying rental and online business,
what is the revenue contribution of the rental and online business in your company? And can you share with us your projections with regards to
your plan to expand the sales?
And my second question relates to your overseas manufacturing plant. There was a media release that LG built in Tennessee -- built a manufacturing
plant in Tennessee, the United States. What are the benefits and some downside of investing in overseas -- investing in building overseas
manufacturing plant? And do you have any plans to expand into different product categories besides washing machines?
Unidentified Company Representative
[Interpreted] I will first answer on rental and online channel. With our rental business, in the first quarter, the business grew by 30%, and we are
achieving a strong double-digit profitability. And the revenue contribution of rental business in the company is constantly growing. However, with
the widespread availability of water purifiers and air purifiers, the competition in the domestic market is expected to intensify.
So related to water purifiers and air purifiers, we are planning to expand customer options such as long-term contracts. And we are also looking
to expand into new category of products, such as dishwashers, in order to create new demand.
Now let me talk about the online channel. We are focusing our efforts in the countries where the revenue contribution is more important than
other regions.
I will introduce 2 strategies. First, by strengthening our e-commerce activities with core distribution channels, we are improving our relationship
with them. Second is our strategy to operate an online brand shop. In doing so, we are expanding customers and membership. And by offering
tailored services to customers, we are increasing the number of loyal customers, and thereby expanding our fandom. With this change management
centered around customers, we are going to continue to improve our online sales activities.
I will answer on your second question about the safeguard in -- with overseas plants. Our washing machine manufacturing plant in the United
States is being operated very smoothly. The challenge that we are facing is to first achieve stabilization with the operation of our manufacturing
plants. And our top priority at the moment is to provide supply visibility to our key customers. I believe that is the basis of our competitiveness.
And regarding the safeguard and cost pressure issue, we are able to move in line with the Biden administration's policy. And if we monitor the
changes in Biden administration's policy, we will be able to respond to policy changes in a timely manner. And at the moment, there is no critical
issue.
And even if we have to expand our facilities by expanding production lines and even if there are new regulations or environmental changes, we
have the on-time response system ready by adding or expanding lines in our Tennessee manufacturing plant.
So the bottom line is, at the moment, we don't have any critical plans to make any critical changes to our production site.
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