LG Electronics Inc
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LG Electronics Inc
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Good morning and good afternoon. Thank you for joining LG Electronics earnings release conference call for the first quarter of 2021. This conference call starts with a presentation on the earnings results followed by a Q&A session [Operator Instructions]. I would now like to hand the conference over to the first speaker
Good afternoon. My name is Sang Bo Sim from Investor Relations. Thank you for joining LG Electronics earnings release conference call for the first quarter of 2021. With me are representatives of business management division of each business; Mr. I-Kueon Kim from Home Appliance and Air Solution; Mr. Jeong Hee Lee from Home Entertainment; Mr. [ Chongfeng Zhao ] from Mobile Communications; Mr. [ Geun Tae ] Kim from Vehicle Component Solutions; Mr. Park from Business Solutions. We are also joined by [ Ms. Sue Kyung Park ] from Corporate Business Management Division; Mr. Hyungyu Lee from Finance Division; and Mr. [ Hung Su Lee ] from Accounting Division.
Please be noted that all statements that we will be making today regarding our financial results of the first quarter are subject to change in accordance with the results 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 outlook and forward looking statements made today.
Like you may have heard through media reports, there were some positive changes to our credit ratings provided by global agencies. The top 3 global credit rating agencies, Moody's, S&P and Fitch, raised their credit rating or outlook for LG Electronics this year. This can be interpreted to reflect the positive assessment on the direction of our business strategy such as reinforcing our market position in appliance and TV businesses, discontinuing the mobile business and strengthening growth momentum in the vehicle components business through its joint venture with Magna. We believe the upgrade of our credit rating or outlook by credible credit rating agencies will have a positive effect in attracting investors going forward and we plan to continue to actively communicate with the market regarding our business and its direction.
Today, I will outline the overall performance results of the first quarter of 2021 and the outlook for the second quarter. After that, each division will take turns to deliver its business results and outlook.
Before we get started, I would like to state that as a result of an organization reshuffling to maximize synergy effects among B2B businesses, the robot business, originally under Others, was incorporated into BS. Accordingly, this change is reflected in BS results from our first quarter earnings release, and past performance results have also been restated to reflect this organization change.
Now let me start with the consolidated financial results of the first quarter of 2021 and the outlook for the second quarter.
Consolidated sales of the first quarter was KRW 18.8 trillion and operating profit was KRW 1.5 trillion. Sales grew 28% year-on-year, driven by increased sales of premium appliances in HNA, significant sales expansion of OLED and NanoCell TVs in HE and a solid upward sales trend in VS. Despite the impact from recurring COVID-19 outbreaks, operating profit was greatly improved year-on-year, thanks to continuous growth of premium product sales in the appliance and TV businesses and enhanced profitability attributable to sales growth in VS.
I will now briefly review the first quarter performance of each business.
H&A recorded KRW 6.7 trillion in sales, KRW 919.9 billion in operating profit and 13.7% in profitability. HE recorded KRW 4 trillion in sales, KRW 403.8 billion in operating profit and 10.1% in profitability. MC recorded KRW 998.7 billion in sales and KRW 280.1 billion in operating loss. VS recorded KRW 1.9 trillion in sales and KRW 700 million in operating loss. VS recorded KRW 1.9 trillion in sales, KRW 134 billion in operating profit and 7.2% in profitability.
Further details by business will be covered in later slides.
Let's move on to the profit and loss and cash flow of the first quarter. In terms of profit and loss, our net income reflecting financial income and expense, equity method gain and loss, other nonoperating income and expense, and corporate income tax posted KRW 1.2 trillion.
Next, on cash flow. Cash flow from operating activities of the first quarter was KRW 1.3 trillion and cash flow from investment activities was negative KRW 682.8 billion. As a result, net cash flow amounted to KRW 703.4 billion. And when reflecting cash flow from financial activities of negative KRW 293.8 billion, cash balance at the end of the first quarter increased by KRW 409.7 billion quarter-on-quarter to stand at KRW 6.3 trillion.
Next is the key financial position and indicators for the first quarter of 2021. As of the end of the first quarter, our assets stood at KRW 50.5 trillion, liability at KRW 31.6 trillion and equity at KRW 18.9 trillion. All leverage ratios, liability to equity, debt to equity and net debt to equity decreased quarter-on-quarter, maintaining a healthy financial condition.
Next is the outlook for the second quarter.
In terms of the macro environment, along with the slow recovery in the real economy, with sluggish employment and increase of household and corporate debt, economic growth levels are expected to differ by country, depending on economic stimulus packages, progress in COVID-19 vaccination and capabilities in dealing with the coronavirus pandemic. Amidst this environment, we will maintain our competitive edge in the market by expanding our market position in main businesses and increasing investment in strategic businesses. We will also achieve a stable profit structure by preemptively saving costs in the face of upward cost trends and efficiently managing resources. Through these efforts, we will build a sound business foundation, enabling us to pursue growth despite the COVID-19 pandemic. We expect sales to grow significantly in the second quarter year-on-year, affected by strong sales in appliance and TV, with recovering demand in the global market and increased sales in the vehicle component business. Accordingly, profit is projected to improve year-on-year.
Now let's move on to the first quarter results and outlook by business.
First is H&A. Let me share the first quarter results of H&A. Sales recorded KRW 6.7 trillion, with a 24% growth year-on-year, driven by growth in various markets, such as Korea, North America and Europe. In terms of profit, operating profit improved significantly year-on-year, thanks to sales growth across all regions, increased sales in new appliance categories and the continuous growth of our rental business.
Next is the outlook for the second quarter.
There are growing expectations of recovery in market demand, but business risks are expected to remain high, with intensified competition and unfavorable foreign exchange rates, raw material prices and logistics costs. Amidst this environment, in terms of sales, we expect to maintain an ongoing growth trend year-on-year by strengthening our competitiveness in main businesses and expanding overseas sales in our new appliance categories. We will focus our capabilities on achieving profitability similar to or above the levels of the previous year by optimizing operations.
I will share the first quarter results of HE. Sales increased by a large margin year-on-year, thanks to the recovering demand in North America and Europe and expanded product sales of OLED and NanoCell TVs. Despite the sharp increase of LCD panel prices, operating profit grew year-on-year, driven by an improved product mix focusing on premium products and efficient cost spending.
Now let me share the outlook for the second quarter. In the market, TV demand is expected to continue its upward trend, centered around premium products, with growing demand for entertainment at home and the increase of high-definition video content. In line with the market trends, we expect to secure significant growth in revenue and stable profitability, driven by expanded sales of premium TVs, such as OLED, NanoCell and large-sized TVs.
Let me share the first quarter results of MC. Sales stood at similar levels to the same period last year as new models were not launched and operations centered around existing models. Sales decreased 28% quarter-on-quarter. In terms of profit, resource input was minimized as we reviewed the possible close of business. The profitability was undermined year-on-year with the reduced sales of premium products and decreased selling price as sales were focused on existing models.
Now our plans for MC going forward. We announced the close of our mobile phone business on April 5. Accordingly, we expect to end all sales activities by the end of July. However, our mobile phones will be available for purchase even after July until such a time when all inventory held by sellers are sold. Currently, we are following up on the decision to discontinue the business, with plans in place regarding the redeployment of personnel, liquidation of tangible and intangible assets, compensation for business partners and suppliers, and service support for customers. We will disclose the profitability related to discontinued operations occurring with the close of the business in the second quarter results, showing a breakdown between operating profit and loss from continuing and discontinued operations.
Let me share the first quarter results of VS. Sales increased year-on-year, driven by the rising demand in key automotive markets, such as North America and Europe, and expanded volumes with new projects starting mass production. As for profit, operating loss was reduced year-on-year, thanks to the sales increase on the back of recovering demand for vehicle components and efficient resources -- resource management.
For the second quarter outlook, market uncertainties are expected to grow due to the continued COVID-19 pandemic and the supply shortage of components such as automotive semiconductors. We will maximize sales by actively responding to the recovery in the automotive market and continue to enhance profitability, with ongoing cost-saving activities and focused efforts in global supply chain management for the stable supply of components.
I will share the first quarter results of BS. Sales increased 23% quarter-on-quarter and 9% year-on-year, driven by sales growth in IT products such as monitor and PC, related to the continued demand from the non-face-to-face lifestyle of remote working and online learning. Operating profit improved quarter-on-quarter, on the back of expanded sales of strategic products, despite the increase in major component prices and global logistics costs.
Now the outlook for the second quarter. The demand for IT products related to the contact-free trend is expected to continue. And in information display, we expect a gradual recovery of demand. But there are also risks related to the LCD panel price increase and component supply. We will exert efforts to enhance sales and improve profitability across our business areas by strengthening sales in premium products in the IT business, focusing on developing differentiated products and solutions by vertical and information display, and continuously reinforcing power and efficiency features in solar.
That brings us to the end of the first quarter earnings release and the outlook for the second quarter. We will now take questions. Operator, please commence with the Q&A session.
[Foreign Language] [Operator Instructions] [Foreign Language] The first question will be presented by Kamu Park from Daishin Securities.
[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?
[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.
[Foreign Language] The next question will be presented by Dongwon Kim from KB Securities.
[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 and also your mid- to long-term revenue projections.
[Interpreted] Let me answer your first question on HE. As mentioned several times earlier, our target for this year is double that of last year. And our shipment volume in Q1 has exceeded our plan. And it's also looking to progress moving in second quarter as well. So once again, our target for this year is double that of last year.
And in order to achieve our goal to make OLED TV a popular choice for general consumers, we are going to continue with our marketing investment. In particular, in terms of operating our models, we are going to diversify by dividing into different segments: good, better and best. And we are also going to expand the coverage up to 41-inch.
Let me answer your second question on JV with Magna. The market size of the EV components business that the JV is targeting is expected to grow from KRW 10 trillion in 2020 to 35% of CAGR by 2025. The revenue growth of the JV is expected to be over 50% of compound annual growth rate by 2025, higher growth rate than the market.
The JV will formally start in the second half of this year. But because of the nature of the vehicle component business, we need to consider the lead time from winning the business to mass production. So we expect the JV related synergies to be created after 2024.
[Foreign Language] The next question will be presented by Sang Ryul Kwon from DB Financial Investment.
[Interpreted] I have 2 questions, one for mobile business and the other for Business Solutions. First, Mobile Communications business. I believe that MC business holds a lot of communication-related patents and IPs. How are you going to use them in other businesses? And if you believe that you'll be able to use these assets for future businesses, what kind of synergy are you expecting? Can you elaborate on them?
My second question regards Business Solutions business. With the introduction of vaccines, many are hoping to see the coronavirus pandemic subside in the second half. And IT business enjoyed strong demand during the COVID-19 because of the stay-at-home trend. If the COVID-19 subsides in the second half and the demand for IT products falls in the second half, what kind of countermeasures do you have for these kind of risk? And what is your estimation for the market changes?
[Interpreted] Let me answer your first question, regarding how the IP patents are going to be used for other businesses. Well, internally, we -- our plan is to use these core IPs and assets, especially in the smart home appliance and new products using IoT.
For the key IP assets of the MC business, these are the key technologies that can be used for vehicle connectivity. So for our Vehicle Solution business, these assets will be used for telematics and infotainment business.
Regarding creating the new business strategy with this asset, please understand that I cannot share with you specific information since we are in the process of building a new business model. And currently, we don't have any specific plans regarding -- having a new business model only based on these patents. But once we get specific ideas, we'll be able to share with you the relevant information.
Let me answer your questions regarding IT products. According to Market Research Institute, the overall monitor market of 2021 is expected to grow by 9% year-on-year and gaming monitor a whopping 43%.
For the overall monitor market of 2022, the market expects the overall monitor market to be quite similar to that of 2021 and gaming monitors is expected to grow by around 10%.
COVID-19 has brought massive change to lifestyles. Working from home and remote learning are not just a temporary phenomenon. They are new normal. So we believe that the demand for IT products will continue to grow. And accordingly, our estimation is in line with that of the market.
The Business Solutions will focus on the sales of gaming monitor, which is expected to grow in the second half, and at the same time, seek new business opportunities in high-resolution, large-screen premium and business monitors.
[Foreign Language] The next question will be presented by Nicolas Gaudois from UBS.
First question is going back to the demand for both appliances and TVs, obviously, a very strong year-to-date. How sustainable do you believe that demand is as countries move to post-COVID restrictions and competition for disposable income wallet share versus other consumer discretionary services, like travel, actually start to go up from here?
And secondly, going back to profitability for the TV business. We talked about LCD panel prices. But actually, it looks like OLED panel prices are also starting to move up after significantly trading up -- a trend for LCD panel prices. What will be the likely margin impact on your OLED TV business going forward?
[Interpreted] I will first answer on H&A. The pent-up demand, which was unleashed starting from last year, will continue to grow in the second half of this year as well. So we believe that the market growth will be similar to or greater than that of the second half of last year.
And even after the COVID subsides, we believe that the demand for appliances with hygienic and health care related features will continue to go up.
Based on our strong growth in the areas of new category of appliances and appliances with hygienic and steam functions and with our rental business, we are going to continue to be the leader of the market as we are today, based on our core technology and differentiated products.
Also, through the successful launch of premium products, we are going to capture opportunities for expanded sales. And we are also going to strengthen our marketing activities for online sales, thereby achieving stable profitability.
Regarding the demand in the second half, we expect the demand to slow down compared to the first half of this year.
According to market research reports, the growth in the second half of 2021 will fall by 8% to 10% year-on-year. And this is because of the widespread vaccinations, which will lead to the normalization of the economy.
Now I will answer your second question regarding LCD prices leading to price rise, leading to OLED price rise. For OLED, we are going to continue to maintain its premium value compared to LCD. And we also expect the shift in consumption from -- into large size and premium products. So as mentioned before, we are going to be able to achieve our target of OLED shipment.
[Foreign Language] The next question will be presented by J.J. Park from JPMorgan.
[Interpreted] I have 2 questions. First regards Vehicle Solution business. This may be too basic of a question, but I was wondering about the correlation between the backlog and sales. To my understanding, your current backlog stands at around KRW 60 trillion. Infotainment takes up the biggest chunk, followed by LAN and powertrain. What I heard is that the proportion, the percentage of powertrain in the backlog is currently growing. So are you seeing any kind of change in the relations between the backlog and sales, as you are shifting from the backlog concentrated on infotainment?
My second question regards the corporate-wide operation on the balance sheet numbers. When I look at the numbers, it looks like you have succeeded in reducing your net debt by KRW 2.3 trillion. And I believe this is quite fast -- it was quite fast for you to reduce this amount of debt in a very short period of time. So I was wondering if you have adopted special measures to make this possible for the past year.
[Interpreted] Let me answer your questions regarding Vehicle Solutions business. Unfortunately, I cannot disclose specific numbers here. But as you mentioned, by the end of in 2021, we believe our backlog will achieve KRW 60 trillion level.
When you look at the rough breakdown of the current backlog by product, infotainment takes up about half in the backlog and the rest consists of EV components and LAN.
Regarding your question of the correlation between backlog and sales, the sales will unfold, as we have described in the previous sessions. And as you may well know, it takes about 2.5 to 5 years between winning a contract development and development to mass production. So it's going to take that amount of years for the sales to be realized as numbers.
Let me answer from corporate-wide operation side. We are working hard to create cash flow based on profitable business operation and securing working capital. The cash flow that we have improved through these activities will be used to reduce debt level and making investment for our mid- to long-term business and securing business driving engines. By doing so, we'll be able to improve financial index and enhance shareholder returns.
[Foreign Language] The next question will be presented by Sung Kyu Kim from Daiwa Capital Market.
[Interpreted] I have 2 questions, one for VS and one for HE. My first question relates to the current semiconductor supply shortage issue. Because of the shortage issue, it caused disruption to OEM production. So even though your performance was good in the first quarter, I believe it will have a negative impact on your second quarter performance. But you mentioned earlier that you will be able to achieve stable profitability in the second quarter as well. So do you really believe that the current supply shortage issue will have no impact on your profitability in the second quarter? And will you be able to achieve your goal of making a turnaround in the second half?
And my second question is related to OLED. Your first quarter results of OLED sales were very good. And the market is growing, which is good news for us. But at the same time, with the growing market size, competitors are looking to enter the market, and there is a rumor that our competitor could be entering the OLED market. So in the medium to long term, there are concerns that the competition in the OLED market could intensify. So what do you think about the competition dynamics in the OLED market? And what are your countermeasure?
[Interpreted] Let me answer your first question on the supply issue. The current supply shortage issue is not temporary, and it's expected to persist for quite some time.
In the first quarter, we were able to minimize risk through our supply improvement activities with key customers and suppliers. However, starting from the second quarter, we expect to see some risk with some channels.
We are going to do our utmost to pull in shortage component by closely working with our customers and suppliers. At the same time, we are also planning to dual-source shortage materials to minimize risk. However, the cost associated with this is expected to go up.
The supply shortage issue in the first half is increasing the revenue risk, and this problem is expected to persist for quite some time. However, through effective global supply chain management, we expect to achieve the revenue target for this year.
On the P&L side, in spite of the semiconductor supply shortage issue, we expect to achieve our goal to make a turnaround in the second half of this year through cost improvement and efficient resource allocation.
As you mentioned, the OLED market is growing and it will continue with its growth. And with our competition entering the market, it will further increase the size of the market. And in terms of expanding the landscape of OLED, it's welcome news.
And regarding the competition in the market, as a leader in the OLED market, we have absolute market dominance, and that is our big competitive advantage.
And based on this market dominance, we are going to further differentiate our products to expand our fandom, and that will help us maintain our competitive advantage in the market.
And starting from this year, we are going to expand our investments in marketing. In doing so, we will be able to build closer relationship with customers and strengthen our brand image.
[Foreign Language] The next question will be presented by Dong-je Woo from Bank of America.
[Interpreted] I have a question regarding Vehicle Solutions business. You mentioned about your estimation of how the business will grow with the JV operation. You mentioned about 50% growth in CAGR. And rough calculation gives me this some idea that it means that your sales will jump by several fold. So by the time we reach 2025, you -- do you believe that you'll be able to reach 5% to 10% of sales in OI with your JV operation? And can you elaborate on how this is going to be realized?
[Interpreted] Let me answer your question. Regarding the sales amount related to the JV, it is going to be -- it was over KRW 200 billion in 2020. In -- unfortunately, I cannot specify the sales figure for 2024 or 2025. But we are pretty sure that we'll be able to achieve more than 50% of CAGR. In terms of the profitability, based on the current forecast, according to our current level of backlog, by 2025, we believe that we'll be able to achieve an average profitability level of Tier 1 company.
[Interpreted] Let me continue with my questions. Today, many express their concerns about the business impact the semiconductor supply crunch can have to LGE. According to the answers that I heard today, Vehicle Solutions company is expecting to see a very small influence. And your original goal of making a turnaround in the second half remains unchanged. And despite this risk, you mentioned that you'll be able to meet the target without big issues. So can -- could you clarify this to make sure that my understanding is on track?
And if your business hasn't been impacted a lot and will not be impacted by the supply crunch of semiconductors, do you believe that it will be the same for the TV business and home appliance business? Currently, in the market, we are suffering from -- many industries are suffering from the shortage of mainly 8-inch wafer chips. And this is a quite worrisome situation for the overall -- for a lot of industries. So I'd like to ask HE and H&A business perspective regarding this risk and its impact to the business.
[Interpreted]
Let me answer your questions. First, in the corporate-wide perspective, I believe that there are some concerns regarding whether Vehicle Solutions business will be able to make a turnaround in the second half of this year. As mentioned in the beginning, we believe that there will be no big issue in making a turnaround in the second half. We don't know whether that will be in the third quarter or the fourth quarter. We should wait and see how things unfold. But our target of going into the black this year remains unchanged.
Let me answer your other questions regarding semiconductor supply crunch. I believe that there are concerns over our Home Appliance business, HE business and Vehicle Solutions business regarding this supply crunch. For Home Appliance business, most of the semiconductors that are being used for our products are common level chips. So our business is not being influenced by the current supply crunch.
For our TV business, the main concern, I believe, will be on DDI chips. But we already hold quite appropriate level of inventories, and we are having a close cooperation with suppliers. So there is nothing to worry about the negative impact of the chip to the TV business.
For our Vehicle Solutions business, as mentioned before, we might see some disruptions, not that big, but some disruptions in terms of production and provision to some of the OEMs in the second quarter. However, we are closely cooperating with major OEMs. And also, we are working hard to secure appropriate level of stockpiles. So we believe that the negative impact will be minimized.
The semiconductor issue in the automotive industry is a big concern for the global players. So in the second half, we are doing a lot of activities so that we can relieve the impact from the shortage. And in the long run, we are improving our supply chain so that we can soften any kind of blow from the supply issues.
[Foreign Language] The next question will be presented by Jong Wook Lee from Samsung Securities.
[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?
[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.
[Foreign Language] Currently, there are no participants with questions [Operator Instructions]
[Interpreted] That brings us to the end of LG Electronics' earnings release conference call for the first quarter of 2021. For further questions, please contact the IR team. Thank you.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]