Good morning, and good evening. First of all, thank you for joining this conference call for the fiscal year 2023 Q3 earnings by Samsung SDI. The conference call will start with a presentation, followed by a Q&A session. If you have a question, please press star and one on your phone during the Q&A. That is star and one on your phone. Now we shall commence the presentation of the earnings call by Samsung SDI. Good morning, and thank you for joining us today. I am Yoon Tae Kim, Vice President of Business Management Office at Samsung SDI. First, joining us are CFO Jong-sung Kim, EVP Michael Son, representing Automotive and ESS Battery, EVP Jae-young Lee for Small Battery, and EVP Sang-kyun Kim for Electronic Materials. We'll now begin the earnings call for the Q3 of 2023. First off, our results and financial highlights. Despite a challenging business environment with weakening market demand under a long-lasting global economic downturn, we yielded better results in both revenue and profits versus last quarter. We delivered KRW 5.9 trillion in revenue, up by 2% QOQ and 11% YOY. The operating profit stood at KRW 496 billion, sequentially rising 10% with a better operating margin of 8.3%. Compared to last year's figures, the total operating profit went down 12% due to lower small battery demand in power tools, while the automotive batteries of prismatic and cylindrical form factors boasted a high profit, which rose over 60% YOY. Looking at each business segment, battery business revenue saw a slight growth QOQ and a 10% increase YOY to KRW 5.3 trillion. The operating profit exceeded last quarter's record by 6% to KRW 412 billion, but declined 15% versus last year. Despite stagnant market demand, electronic materials revenue grew thanks to expanded sales of display materials. The revenue was KRW 608 billion, a 7% quarterly increase, and 14% yearly. The operating profit was KRW 84.2 billion, up 36% QOQ and 4% YOY. The pre-tax profit was KRW 760 billion with KRW 264 billion non-operating profit, such as profit and loss using the equity method. The net profit stood at KRW 622 billion. The quarter and total assets went up KRW 644 billion sequentially to KRW 33.5 trillion. Liabilities decreased KRW 128 billion QOQ to KRW 14.3 trillion, while the equity increased 777.1 billion to KRW 19.2 trillion, with the debt-to-equity ratio at 75%. Now, our ESG performance during the quarter. Under the CEO's firm belief that ESG management stands as a core edge of the business, Samsung SDI declared environment-friendly management in October last year. Over the past year, we have been delivering strong execution of our eight strategic tasks, such as transitioning to renewable energy, expanding carbon-labeled products, increasing battery recycling, and reducing water use. We became the first rechargeable battery maker to have two of our products carbon footprint labeled from UK-based certifier Carbon Trust. In September, all of our operations in Korea achieved a high status of zero waste to landfill certification. In addition to these feats and environmental efforts, Samsung SDI recently received the best rating in an assessment of the supply chain co-prosperity conducted by Korea's Commission for Corporate Partnership. To bolster the supply chain engagement in the ESG practice, we are also providing our key partners with support in calculating their greenhouse gas emissions, as well as training on preemptive environmental risk management. As such, Samsung SDI and our partners are making concerted efforts to enhance our ESG competitiveness as a business growing together for the future. Now, each business unit will present the details of the Q3 results and the Q4 outlooks. Good morning, this is Michael Son, Head of the Automotive and ESS Battery Strategic Marketing Team. The EV batteries demonstrated a high performance, thanks to the early ramp-up in our Hungary plant's new line, which led to strong P5 sales for the premium segment, producing the highest quarterly profitability. On top of expanding joint ventures in the United States, we signed a supply agreement with Hyundai Motor Company as our new customer, and concretized mid- to long-term expansion plans through top management meetings with our key customers. The ESS battery revenue declined QOQ due to new product demand that held up for Q4. In the fourth quarter, we expect car battery sales to expand, centering on the P5 product. To secure our long-term growth engine, we will continue pressing on with winning new customers and acquiring orders for P6, lead next-generation products and all-solid-state batteries, the latter soon starting sample delivery for our customers. For the ESS batteries sector, we will focus on expanding the sales of new products geared with higher energy and density, and higher energy density and safety, so that we can materialize the sales growth pivoting on utility and utility UPS solutions. This is the end of large-size battery division's presentation. Thank you. Good morning, I am Jae-young Lee, Head of the Small Battery Strategic Marketing Team. Sluggish market demand lingered on in Q3, but we've managed to achieve flattish revenue. Cylindrical battery revenue decreased on the power tool front, yet increased for EV sector, which helped inch up the revenue overall. Weaker front-end demand caused the pouch battery sales to decline. Going forward, although it is unlikely that the market demand will recover in the fourth quarter, we will pursue cylindrical sales expansion directed at the mobility market, encompassing electric bikes and electric vehicles. If at the same time, we will roll out new products in a timely manner and continue seeking new business opportunities in Southeast and West Asia with our new sales bases established recently in India and Vietnam. As for 46-series batteries, our preparation for future business growth is well on the way as we went into full-fledged line operation in Q3, and we'll start sample supply for our customer in the fourth quarter. With the pouch batteries, we aim to meet the demand by actively engaged to meet the demand by supplying for new flagship models of our customer. This is the end of the small-sized battery division's presentation. Thank you. Good morning, I am Sang-kyun Kim, head of Electronic Materials Strategic Marketing Team. Despite market being slow, we closed out Q3 with better results versus Q2, propelled by display material sales. Where the materials enabled such encouraging results for the entire electronic materials business with high demand in mobile devices. polarizer film revenue also rose, thanks to the demand uptick in the big screen TV markets. For semiconductor materials, however, soft demand on our major customers and cost of revenue decline. In Q4, we will intensify our efforts in accommodating promising demand with a forecast of recovering market sentiment, where the material sales will likely sustain growth into the next quarter, thanks to the mass production of a new platform. Anticipating the low season coming up, we plan to focus our polarizer film sales on Chinese and new customers to prevent revenue drop. With semiconductor materials, we will try to expand sales by penetrating into new product applications like thick SOH and premium EMC. Thank you. Now, we will close the presentation and move on to the Q&A session, which will be provided in Korean, followed by consecutive interpreting in English. If you have any questions, please follow the operator's guidance. [Foreign language] Q&A session will begin. Please press star one, star and one if you have any questions. Please press star two, star and two if you want to cancel questions. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant. [Foreign language]The first question will be provided by Woo Hyun Cho from HSBC Securities. Please go ahead with your question. Good morning. Thank you for giving me this opportunity to ask questions. I have two questions related to vehicle batteries. My first question is this: What is SDI's view and response to the ongoing concerns regarding the demand for electric vehicles in the market? And my second question is that the UAW in the U.S. has started a strike against the Big Three automakers for the first time. They're asking for a substantial pay raise. How will this impact Samsung SDI? Thank you. Yeah. 안녕하세요, 경영지원실장 Jong-sung Kim 부사장입니다. 첫 번째 전기차 수요 둔화 우려와 저희 대응 방안에 대해서는 제가 말씀드리겠습니다. 최근 글로벌 경기 둔화가 지속되고 있고, 그 유럽의 일부 국가에서 전기차 관련 정책 변화와 그리고 미국 IRA 법안 변동 가능성 등 전기차 성장세 둔화에 대한 우려가 뭐 좀 있는 걸로 알고 있습니다. 저희가 주요 조사기관들을 포함해서 여러 방면으로 확인한 결과는 중장기 전기차 수요 성장세는 변화가 없다는 것이 지배적인 의견이었습니다. 특히, 최근 유럽 주요국의 친환경 정책 변화 관련 정책의 근본적인 방향이 바뀐 게 없다, 그게 공통된 견해임을 확인하였고요. 예를 들자면, 영국이 내연 차량 판매 금지 시기를 35년으로 조정한 것은 기존의 영국이 EU에 비해서 공격적인 목표를 세웠다가 EU와 동일한 시기로 조정한 것으로 이해하고 있고요. 그 독일의 구매 보조금 축소는 전기차가 이미 시장에서 어느 정도 경쟁력을 갖춘 만큼, 앞으로 구매 시 보조금보다는 충전 인프라 확대를 통해 전기차 시장을 활성화하는 것이 더 좋겠다는 그런 지원 방식 전환으로 이해하고 있습니다. 또한, 미 IRA 관련해서도 법안 발효 이후 OEM들과 전기 업체들 간의 적극적인 투자는 계속되고 있고, 생태계의 형성도 이미 어느 정도 되고 있고, 그리고 향후 미 전기차 산업의 경쟁력 강화 차원에서도 법안의 방향이 바뀌기는 어려울 것으로 보는 것이 업계의 공통된 의견이었습니다. 동시에 2025년부터는 EU의 CO2 배출 규제 강화 및 주요 OEM들의 전기차 라인업 확대가 예정되어 있고, 이를 계기로 전기차 중장기 성장성은 한층 더 확대될 것으로 전망하고 있습니다. 다만, 단기적으로 경기 침체가 지속될 경우에는 단기적인 수요 영향도 있을 수 있다고 보지만, 당사의 경우는 주요 고객향 신모델 출시 효과 등으로 견인한 판매 성장세를 이어나갈 것으로 전망하고 있습니다. 당사는 어쨌든 시장 상황을 면밀하게 센싱해 가면서, 고객 수요에 기반한 라인 적기 증설 및 효율적 운영으로 수익성 위에 질적 성장 경영 체제를 지속해 가면서 미래 성장을 위한 신규 고객 확보에도 최선을 다하도록 하겠습니다. 이상입니다. This is Jong-sung Kim, the CEO of the company. I will provide you the answer for the first question. With the recent global economic slowdown, we are well aware that there are concerns about the slowdown in EV growth due to policy changes in major European countries, as well as potential changes in the US IRA legislation. However, the consensus from multiple sources, including major research firms, is that there is no change in the mid to long term demand growth for EVs. Specifically, on recent changes in green policies in major European countries, the consensus is that the fundamental direction of policy has not changed. In other words, the UK's adjustment of the ICE vehicle ban to 2035 is simply an adjustment of an already aggressive target to align with the EU's timeframe. Germany's reduction in purchasing subsidies suggests that EVs are already competitive enough in the marketplace, prompting the country to shift its support towards promoting the electric vehicle market through expanded charging infrastructure rather than purchasing subsidies. In addition, industry consensus suggests that a change in the direction of the US IRA would be difficult given the established ecosystem with active investment by the OEMs and battery companies since the law's implementation, and a change in the direction at this point would not be conducive to strengthening the competitiveness of the US electric vehicle industry in the years ahead. At the same time, the EU's tightening of CO2 emission regulations and the expansion of EV lineups by major OEMs from 2025 are expected to drive further mid to long term growth for EVs. Though a sustained economic downturn could impact near-term demand, we expect solid sales growth thanks to new model launches of major customers. While carefully monitoring the market, we will sustain our management approach of profitable and qualitative growth by capacity expansion in a timely manner, ensuring efficient operations in line with customer demands, and continuously striving to gain new customers for the future growth. Thank you. 두 번째, UAW 파업이 당사에 미치는 영향에 대한 질문은 제가 답변드리겠습니다. 저는 중대형 전지사업부 전략마케팅실장 Michael Son입니다. 빅쓰리 업체의 공장의 가동 중단이 대부분 내연기관차 생산 공장을 대상으로 진행되고 있는 만큼, 전기차 생산에 미치는 영향은 제한적일 것으로 파악하고 있습니다. 당사의 경우에는, 현재까지 UAW 파업 영향으로 인한 고객의 수요 변화 등 실질적인 영향은 없으며, 미국 JV 준비도 기존 계획대로 차질 없이 진행되고 있습니다. 다만, UAW가 내연기관차 공장의 표준 임금 협약을 전기차용 전지 공장에도 적용하기를 요구하고 있는데, 이는 현재 현지 공장 준비 단계에 있는 당사에게는 직접적인 영향이 없을 것으로 생각되지만, 진행 상황을 면밀히 모니터링하도록 하겠습니다. ... This is Michael Son of the Automotive and ESS Battery Marketing, and I'll be answering your second question regarding UAW. As operation suspensions at the major big three factories are mostly aimed at plants that produce internal combustion engine vehicles, the effect on EV production will be minimal. In our case, there has been no visible impact from the UAW strike so far, such as changes in customer demand. The preparations for the US joint venture are also on track as scheduled. Meanwhile, the UAW is calling for the extension of the standard wage agreement for internal combustion engine vehicle factories to EV battery factories. Though we do not anticipate any direct impact on us as we are still at a preparation stage of the local plant, we will still closely monitor its progress. Thank you. The following question will be presented by Ji San Kim from Kiwoom Securities. Please go ahead with your question. Yes, thank you for giving me this opportunity to ask you questions. I also have two questions. The first question is this: with the prolonged slowdown in demand for power tools, when do you expect to see a recovery? And my second question is related to your new announcement related to the contract with the Hyundai Motor Company. I would like to ask you to please provide us with an explanation of the SDI's recent contract win with Hyundai Motor Company in more detail. And also, will the recent increase in orders, including this one, have any impact on future CapEx of Samsung SDI? This is Jae-young Lee of Small Battery Marketing. I'll be providing you the answer to your first question. With high mortgage rates and a sluggish US housing market index, both of which have a strong correlation with power tool demand, we anticipate continued weak demand for power tools in the foreseeable future. However, with the recent anticipation of monetary easing in the US in 2024, including a reduction in mortgage interest rates, there is a growing view that the macroeconomic situation will gradually improve. We are hoping that this will lead to steady improvement for the demand of power tool sets. In the meantime, demand recovery for power tool batteries is expected to be delayed due to inventory pressures faced by power tool customers. Therefore, we will minimize the impact of the slowdown in demand for power tools by securing new customers for outdoor power equipment or OPE, in addition to conventional power tools, and also by developing new business opportunities for cylindrical applications such as EVs and e-scooters in Southeast and West Asia. Thank you. ... ... This is Michael Son of the Automotive and ESS Battery Marketing, and I'll be answering your second question in regards to this new contract with Hyundai Motor Company. We consider our agreement with Hyundai, a major global OEM, to be a significant acknowledgement of our high energy density prismatic battery technologies' competitiveness in the market. As Hyundai is a global leader in the electric vehicle market, this supply agreement has its significance in that we gained additional momentum for mid- to long-term growth. Moving forward, we are planning to expand our partnership with Hyundai Motor Company through super gap technological competitiveness and the best quality. Yeah, This is Yoon Tae Kim of Finance and Accounting team. I will try to provide you the answer to the second part of your second question, which is related to CapEx. Our CapEx is expected to rise due to the awarded projects and the recent new wins, and there were maybe concerns about funding. However, our principle of prioritizing the use of internal reserves and engaging in external funding only when necessary remains unchanged. In cases of investment in the U.S., which is quite large, we will utilize the advanced technology vehicles manufacturing loan to maintain a strong financial structure, even if our debt increases. The following question will be presented by Sunwoo Lee from Macquarie. Please go ahead with your question. Uh, nice. Good morning, and thank you for giving me this opportunity to ask questions. I have two questions related to the Chinese companies that are supplying the LFP batteries. The first question is, with the oversupply of batteries in the Chinese market, the exports of Chinese batteries to Europe are likely to increase. So what is the impact on Samsung SDI battery business, which has a very high proportion of European supply? And my second question is also related to the LFP battery. How ready is SDI to use LFP in ESS application, given the rapidly growing market share of LFP-based batteries in the ESS industry? Thank you. Again, this is Michael Son of Automotive and ESS Battery Marketing. I'll be providing you the answers to both of your questions. Your first question is related to the oversupply of batteries in the Chinese market and its impact on Samsung SDI's business. Due to the nature of the automotive battery industry, it takes two or three years of development and qualification after signing a supply contract with an automaker to commence full scale mass production. Most of the volume and price within the supply period are predetermined, therefore, it would be inappropriate to assume that Chinese batteries will immediately flood into Europe due to oversupply in the Chinese market. In addition, current policy trends in Europe have increased the need for the OEMs to localize the production of batteries and supply chain. We believe that the capacity to create local production system with scale and supply chain will eventually determine competitive edge of battery companies. Our plant in Hungary has established a reliable local operating system that consistently produces the highest quality batteries, and we plan to solidify next and expand our position in Europe by pursuing fully localized supply chain continuously. Yeah. And as for your second question, related to how ready SDI is to use LFP in ESS. As LFP batteries are rapidly growing its share in the ESS market, it is crucial for us to respond to the growing LFP market in order to expand our ESS business. Our goal is to develop LFP batteries with a mass production target of 2026, and we are currently looking into plans to establish a production line. We may have entered the LFP market later than our peers, but we will make sure we have a successful launch of LFP business by securing cost competitiveness and highest quality through optimization of our own product design, processes, and equipment innovation. The following question will be presented by Hyunsoo Kim from Hana Securities. Please go ahead with your question. Uh, yeah. Good morning, and thank you for giving me the opportunity to ask questions. I also have two questions related to the batteries. With the power tool demand slow to recover, you've mentioned that in your answer previously. Has there been any changes in plans for the construction of the second plant in Malaysia, which I understand was supposedly to be completed by 2025? Yeah. This is Jae-young Lee of the Small Battery Marketing, and I'll provide you the answer related to the power tools. Although the demand for power tools has been slowly slowing down recently, the overall cylindrical battery market is expected to grow about 10% CAGR until 2030 with various applications centering on EVs and micro-mobility, such as e-bikes and e-scooters, growing to 2.3 billion cells by then, which is double the current level. At the same time, we are continuing to explore new applications and are continuing our activities for mid- to long-term sales growth by seeking new business opportunities in Southeast and West Asia, utilizing new sales bases such as India and Vietnam. The second plant in Malaysia is being constructed to meet the rising demand, excuse me, mid- to long-term demand for cylindrical batteries and our expected sales expansion. The plant's progress is well on track. The second question was related to the 4680 batteries. It seems that it appears that many companies are postponing their mass production dates for 4680 battery. So I was wondering how SDI's progress is with its 46-series development? As to your second question related to 4680 cylindrical batteries and also the development progress of 46-series battery development. And also I would like to mention briefly about additional orders besides the one from GM. As recently communicated, our 46-series development is well on track for full-scale mass production in 2026, as we have completed the setup of the mass production line in China in the first half of the year, and commenced sample production, and secured a significant level of yield rate. We are currently in talks with several major OEMs, apart from GM, to acquire more customers. We will release updates to the market as those discussions materialize. The last question will be presented by Dong Jin Kang from Hyundai Motor Securities. Please go ahead with your question. Good morning, and thank you for giving me this opportunity. I will be asking two questions, and the first question is related to the electronic materials business. As you've mentioned before, it seems that the market is rebounding slightly. So, will the electronic materials business recover in Q4 of this year? And what is the outlook for the year 2024? And my second question is related to all solid-state batteries. You've been providing updates on this development progress on a quarterly basis. So, I was wondering if you could also at this point provide more information and if you have faced any challenges in the process of the development? Thank you. This is Sang-kyun Kim of the Electronic Materials Marketing. I will be giving you the answer to your first question. The performance of the electronic materials business is gradually improving from the low point in the first quarter of the year. But with the current recovery in downstream demand still slow, it is expected to be difficult to achieve profitability that's comparable to last year. It is too early to comment on the outlook for 2024, but big sport events such as the Euro Cup and World Cup are expected to increase demand for large screen TVs. And semiconductor materials are also expected to see a meaningful improvement as DRAM demand is expected to recover. We will continue to improve our performance by responding to growing downstream demand and introducing new materials such as tungsten slurry, thick SOH, EUV photoresist, and polarizer film for OLED. Thank you. Let me provide you the answer to your question related to all solid state battery development progress. Once again, this is Michael Son of the Automotive and ESS Battery Marketing. There are many differences between all solid-state batteries and conventional batteries in terms of materials and processes, and developing products with highest energy density and safety has posed many challenges. However, we are making a steady progress. Performance validation will begin in earnest in Q4 with the start of sample deliveries for our customers, and we are also in discussion with a number of OEMs for projects of mass production. For full-scale mass production, we are preparing for larger sized batteries fit for vehicles, development of solid electrolytes, and establishment of SCM. As all solid-state batteries are the core product that will help us secure super gap technology, we will make sure that everything is ready for mass production in 2027. Thank you. Now, with this, we will close the second quarter earnings call. If you have further inquiries, please contact our IR team separately. Thank you!