LG Electronics Achieves Over 3 Trillion KRW Operating Profit for the First Time Last Year Amid 'Untact Boom'... Record High Sales (Comprehensive)
[Asia Economy Reporters Heungsun Kim and Hyunjin Jung] LG Electronics posted its best-ever performance last year as demand for home appliances and IT devices increased due to the spread of untact (contactless) caused by COVID-19.
LG Electronics announced on the 29th that its consolidated operating profit last year reached 3.195 trillion KRW, up 31.1% from the previous year. This is the first time its annual operating profit has exceeded 3 trillion KRW. Sales also hit a record high of 63.262 trillion KRW, up 1.5% from the previous year.
Operating profit in the fourth quarter of last year was 650.2 billion KRW, a 538.7% increase from the previous year, and sales for the same period rose 16.9% year-on-year to 18.7808 trillion KRW. The operating profit margin was 3.5%. Sales, operating profit, and operating profit margin were all the highest ever recorded for a fourth quarter. Sales exceeded 18 trillion KRW for the first time ever on a quarterly basis.
Home Appliances Drive Record Performance
By division, the H&A Business Division, responsible for home appliances, showed remarkable results. Annual sales reached 22.2691 trillion KRW, and operating profit was 2.3526 trillion KRW, both record highs. The annual operating profit margin (10.6%) also hit double digits for the first time. The company explained that this was due to increased sales of new steam appliances such as stylers, dryers, and dishwashers, as well as expanded sales from the rental business.
The Vehicle Component Solutions (VS) business faced difficulties early last year due to production halts at automakers in North America and Europe. However, from the second half of the year, operations normalized, automotive parts demand recovered, and sales from new projects increased, leading the VS Business Division to record its highest annual sales of 5.8015 trillion KRW.
Strong Home Appliance and TV Sales in Q4, Smartphone Slump
In the fourth quarter of last year, the H&A Business Division posted sales of 5.5402 trillion KRW and operating profit of 299.6 billion KRW, both the highest ever for a fourth quarter. Sales showed double-digit growth both domestically and overseas compared to the same period last year, and operating profit increased by 145.2% year-on-year.
The HE Business Division, responsible for TVs and others, recorded sales of 4.283 trillion KRW and operating profit of 204.5 billion KRW in the fourth quarter. Sales increased in major markets such as North America and Europe, recovering to the 4 trillion KRW level for the first time in eight quarters. Operating profit rose 102.5% year-on-year, despite a sharp increase in LCD panel prices, thanks to an expanded sales ratio of premium products such as OLED TVs and NanoCell TVs.
The MC Business Division, responsible for smartphones, posted an operating loss of 248.5 billion KRW in the fourth quarter, widening its deficit from the previous quarter. In contrast, the VS Business Division reduced its operating loss to 2 billion KRW in Q4, raising prospects for a return to profitability this year. Additionally, the BS Business Division, handling B2B, recorded sales of 1.5085 trillion KRW and operating profit of 70.3 billion KRW.
Strengthening Advanced Technologies such as AI, 5G, and Mobility This Year
LG Electronics plans to integrate core technologies such as artificial intelligence (AI), 5G, Internet of Things (IoT), and mobility across all business areas this year to create growth and transformation based on customer value. The company aims to expand sales of hygiene appliances, space appliances, and premium products like OLED TVs, and actively respond to product demand arising from the spread of untact.
However, the home appliance market is expected to face uncertainties. The H&A Business Division stated, "We plan to maintain sales growth by appropriately responding to market changes and secure profitability through cost structure improvements and optimization of resource input."
The TV market is expected to sustain global demand as people spend more time at home. The HE Business Division plans to increase sales and maintain profitability by expanding sales centered on premium products such as OLED TVs, NanoCell TVs, and large-sized TVs.
The VS Business Division aims to secure a profit-generating foundation to return to profitability this year. It also plans to strengthen vehicle software capabilities and stabilize the electric vehicle parts joint venture 'LG Magna e-Powertrain' (tentative name) early to enhance business competitiveness.
The BS Business Division plans to expand sales and improve profitability by promoting competitive products. The IT business will actively respond to increased demand due to untact, and the Information Display business will focus on key customer groups such as education and enterprises. The solar power business also aims to expand sales by strengthening product competitiveness.
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The MC Business Division’s mobile business, which has accumulated losses of around 5 trillion KRW over several years, is at a point where it must make the best choice by objectively assessing current and future competitiveness. LG Electronics said, "We are keeping all possibilities open and carefully reviewing the direction of business operations."
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