LG Electronics Achieves Record High Sales but Operating Profit Drops 10% (Update)

[Asia Economy Reporter Changhwan Lee] LG Electronics announced on the 30th that its annual sales surpassed 60 trillion KRW for the first time ever last year, driven by an expansion in premium product sales, marking a record high. However, operating profit declined by about 10% due to sluggish smartphone business performance.

On the 30th, LG Electronics disclosed that its consolidated sales for last year reached 62.3062 trillion KRW, with an operating profit of 2.4361 trillion KRW.

Sales marked an all-time high on an annual basis, increasing 1.6% compared to the previous year (61.3417 trillion KRW). Operating profit decreased by 9.9% compared to the previous year (2.7033 trillion KRW).

By division, the performance of the Home Appliance & Air Solution (H&A) business, which has been increasing the proportion of premium products such as LG Signature and new home appliances, stood out. The H&A Business Division surpassed 20 trillion KRW in annual sales for the first time by strengthening its dominance in the global premium market. It recorded all-time highs in operating profit (1.9962 trillion KRW) and operating profit margin of 9.3%.

Looking at the fourth quarter alone, sales for Q4 last year were 16.0612 trillion KRW, and operating profit was 101.8 billion KRW. Sales and operating profit increased by 1.8% and 34.5%, respectively, compared to the same period last year.

The H&A Business Division achieved sales of 4.6161 trillion KRW and operating profit of 122.2 billion KRW. Sales were the highest ever recorded for a fourth quarter. Thanks to growth across all overseas regions, sales increased by 6.7% compared to the same period last year.

Operating profit rose by 8.5% year-on-year despite increased marketing expenses, due to expanded sales of premium products and cost reductions.

The Home Entertainment (HE) Business Division, responsible for TVs, recorded sales of 4.5905 trillion KRW and operating profit of 110 billion KRW. Sales were similar to the same period last year, supported by the year-end peak season and an increased proportion of premium products. Operating profit declined compared to the same period last year due to increased marketing expenses amid intensified competition during the peak season.

The Mobile Communications (MC) Business Division posted sales of 1.3208 trillion KRW and an operating loss of 332.2 billion KRW. Sales decreased year-on-year due to reduced sales of entry-level smartphones in overseas markets such as North America. Operating losses continued due to sales decline, increased marketing expenses, and year-end inventory adjustments.

The Vehicle Solutions (VS) Business Division recorded sales of 1.3552 trillion KRW and an operating loss of 63.7 billion KRW. Sales declined by 3.1% year-on-year due to a slump in the global automobile market. Operating losses persisted as the stabilization of new product mass production was delayed.

The Business Solutions (BS) Business Division achieved sales of 672.8 billion KRW and operating profit of 66.4 billion KRW. Sales increased by 12.5% year-on-year due to increased sales of premium products such as LED signage and high-output premium solar modules.

In the Information Display business, sales of high-margin strategic products increased, and improvements in output and productivity of solar modules led to a significant rise in operating profit compared to the same period last year.

LG Electronics stated that, given the expectation of increased uncertainty this year, it will further expand sales of premium products to strengthen competitiveness.

The H&A Business Division plans to strengthen its business portfolio by expanding sales of new growth and premium products, and to generate stable profits through efficient resource allocation and continuous cost improvements.

Although the global TV market is expected to face intensified competition due to growth stagnation, demand for premium TVs such as OLED TVs and Ultra HD TVs is expected to continue increasing. The HE Business Division plans to maintain a healthy profit structure by strengthening sales of premium products.

This year, the smartphone market is expected to see some increase in premium demand due to the expansion of 5G and new form factors, but price competition among companies in the entry-level market is expected to intensify. The MC Business Division plans to achieve meaningful results in the 5G market by timely launching various 5G models tailored to each country's situation, ranging from premium to entry-level devices, in line with the expansion of the 5G market.

The global automobile market is expected to stagnate due to downturns in major markets such as the United States and Europe, but the electric vehicle market is expected to expand due to strengthened environmental regulations in Europe. The VS Business Division plans to improve profitability through internalization of core components and securing software competitiveness.

The Information Display market is expected to continue growing centered on premium products, and sales of high-output solar modules for home use are expected to increase. The BS Business Division plans to actively respond to premium demand such as LED signage and aggressively target the high-output solar module market to simultaneously strengthen sales and profitability.

This content was produced with the assistance of AI translation services.