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: Jong Wook Lee - Samsung Securities Co. Ltd., Research Division - Analyst
: [Interpreted] I have 2 questions. One related to the corporate-wide operations and one related to H&A. First for the corporate-wide question, I think
you enjoyed good results in the second quarter. But in the second half, the uncertainties from the external environment continues. And also due
to seasonality, the second half is relatively a lower season for you, so you may face some difficulties. So do you have any strategies or direction on
how to overcome the low season in the second half?
My second question related to H&A. I believe that the sales declined year-on-year and quarter-on-quarter, but you saw enjoyable profit increase.
So could you share with us the various strategies or products or reasons that you were able to enjoy this profitability?
Jeong Hee Lee;VP;Business Planning Division
[Interpreted] Let me answer from the corporate side. I think your question was regarding the strategy and direction for the low season we see in
terms of our performance in the second half. Due to our business characteristics or the seasonality of the product itself, we do have a tendency to
be slightly weaker in the second half compared to the first half. And to overcome the seasonality in our business, we are taking various measures
such as expanding the B2B business or reducing the seasonality in the product itself by diversifying the features in the product, optimizing the
cost spending by quarter and expanding our rental business, which is less vulnerable to seasonality. Also, we seek to expand sales opportunities
in service or platform-based business as well. So through these various measures, we are trying to have strategic changes to our business.
And within our -- regarding our business direction, in the short term, we do believe that there will be some demand that was suppressed in the
first half deferred over and coming into play in the second half. So for our Appliance business, we plan to maintain our global top position for our
TV business. We seek to expand the OLED TV sales based on the mass production being started at the Guangzhou factory of LG Display and also
maximize sales in the peak season of our large-sized TVs.
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JULY 30, 2020 / 7:00AM, 066570.KS - Q2 2020 LG Electronics Inc Earnings Call
For mobile, we would like to expand sales of our mass-tier products, especially in the U.S. market and also increased sales that are more cost effective
for the customers in 5G. And in terms of a corporate-wide effect, we will also continue our efficient cost management. In this, well, we'll try to
minimize the impact on our profit and continue to cope with the low season we usually see in the second half.
I-Kueon Kim;VP;H&A Financial Planning Division
I'll answer from H&A. So like I mentioned before, due to the COVID-19 impact, we saw sales decrease in both first and second quarter. In the first
half, we made efforts to improve our cost structure and also did -- conducted cost-saving activities for a sounder profit structure, which led to the
increase of our profitability. Also within our business, we are expanding the sales proportion from our new category appliances, and this is driving
the profitability where we are maintaining double digits.
Moreover, in the second half, we believe that some of the restrictions brought on due to the COVID-19 situation will be lifted in the market, and
our sales will turn around to increase. And we'll see expand sales in our premium and new category products and also the health care-related
appliances with the hygienic features as well. So we'll be able to enjoy stable profitability in the second half.
Question: Dongwon Kim - KB Securities Co., Ltd., Research Division - Analyst
: [Interpreted] I have 2 questions, one for HE and the other for H&A. Starting from July, LG display started OLED panel production in production. And
I believe the OLED panel supply will get much better. So what is your outlook on the changes of the OLED panel price? And do you have any changes
in your strategy regarding this?
Next question is to H&A business. When you look at the past 3 years' earnings number of the H&A business, it looks like you have been maintaining
very high level of sales and profitability. Do you think you'll be able to get this high profitability and sales figures through the future? And do you
think this is valid and feasible? And in mid- to long-term perspective, what is the appropriate level of profitability for H&A.
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