LG Innotek Surpasses 300 Billion KRW in SG&A Expenses... Expands Investment in Automotive Components and Car LED

Marketing Costs Increase Consecutively Over 5 Years

[Asia Economy Reporter Dongwoo Lee] LG Innotek's selling and administrative expenses surpassed 300 billion KRW for the first time last year. It was revealed that the company significantly increased investment costs to strengthen its automotive electronic components and vehicle light-emitting diode (LED) business divisions, which it has identified as new growth engines.

According to the audit report submitted by LG Innotek to the Financial Supervisory Service on the 13th, the company spent a total of 316.1 billion KRW on selling and administrative expenses last year. This represents a 12.9% increase compared to the previous year (279.8 billion KRW).

Since LG Innotek spent 237.2 billion KRW on selling and administrative expenses in 2015, it has steadily increased marketing costs over the past five years: 251.1 billion KRW in 2016, 265.6 billion KRW in 2017, and 279.8 billion KRW in 2018. Alongside this, LG Innotek has invested approximately 300 billion KRW annually in research and development for each business sector, resulting in a total operating expense of 625.7 billion KRW last year when combining selling and administrative expenses with R&D costs.

By segment, the company spent a total of 293.1 billion KRW on its core optical solutions business, which mainly supplies smartphone cameras and three-dimensional (3D) sensing modules to global companies. It also spent 133.5 billion KRW on automotive components, 74.2 billion KRW on substrate materials, and 54.2 billion KRW on the LED business. Notably, operating expenses for automotive components and vehicle LED lighting businesses increased by 11.1% and 11.5%, respectively, compared to the previous year. This growth rate is significantly higher than the 1.7% and 4.2% increases seen in the optical solutions and substrate materials businesses, respectively.

Recently, LG Innotek changed the name of its vehicle lighting business organization from the "Vehicle LED Business" division to the "Vehicle Lighting Solution Business" division and reorganized the marketing team to report directly to the business unit. This move is interpreted as a strategic preparation for the global automotive lighting market, which is expected to grow to 37.3 billion USD (approximately 44.648 trillion KRW) by 2023.

To expand its automotive components and LED business, LG Innotek plans to strengthen development, product planning, and marketing activities for major global customers in North America, China, Japan, and other regions. It is currently known to be researching applications for vehicle-to-vehicle information exchange, communication, and entertainment.

However, improving profitability relative to investment remains a challenge. LG Innotek recorded operating losses of 51.9 billion KRW in the automotive components business and 83.6 billion KRW in the LED business last year. These losses increased by 239% and 145%, respectively, compared to the same period the previous year.

An LG Innotek official stated, "Despite increased sales, some losses occurred in the automotive components sector due to sluggish automobile market conditions and intensified global price competition. In the LED business, costs incurred from restructuring the general LED business outside of vehicle applications are expected to gradually decrease."

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