Samsung Leads LG in TV and Home Appliance Operating Profit for the First Time in 4 Years... LG Maintains Profitability 'Advantage' (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Samsung Electronics has surpassed its "electronics industry rival" LG Electronics in the integrated consumer electronics sector, which combines TVs and home appliances, for the first time in four years. With the expansion of remote work due to COVID-19 and increased pent-up demand, both companies saw a sharp rise in home appliance sales, but TV performance appears to have determined the outcome. However, since LG Electronics leads Samsung in profitability within the integrated consumer electronics sector, competition between the two rivals is expected to remain fierce going forward.

According to the Financial Supervisory Service's electronic disclosure system on the 1st, Samsung Electronics recorded an operating profit of 3.56 trillion KRW in the consumer electronics (CE) sector, which combines TVs and home appliances, last year, surpassing LG Electronics' operating profit of 3.3223 trillion KRW in its Home Appliance & Air Solution (H&A) and Home Entertainment (HE/TV) sectors. This is the first time since 2016 that Samsung Electronics has earned more operating profit than LG Electronics in the integrated consumer electronics sector.

Looking at sales, Samsung Electronics recorded 48.17 trillion KRW in the CE sector last year, a 7.6% increase from the previous year. LG Electronics posted 22.2691 trillion KRW (10.6% increase) in the H&A sector and 13.1798 trillion KRW (7.4% increase) in the HE sector, totaling 35.4489 trillion KRW.

LG Electronics achieved record-high sales and operating profits in the H&A sector, but its total integrated operating profit for all home appliances, including the HE sector, lagged behind Samsung Electronics by about 200 billion KRW. Instead, LG Electronics' monitor and display items, which are included in Samsung's CE sector, are accounted for under the Business Solutions (BS) division and thus are not included in the H&A and HE results.

The TV sector's performance was the deciding factor that made the two companies both rejoice and lament. LG Electronics secured superiority in the home appliance sector by consecutively launching new appliances such as clothing care systems, drum washing machines, and dryers, recording higher operating profits than Samsung Electronics over the past three years. In 2017?2018, Samsung Electronics' CE sector struggled, with operating profits trailing LG Electronics by more than 1 trillion KRW.

However, LG Electronics' TV sales led the H&A sector until 2016, but the situation reversed from 2017 onward, with H&A sales (18.515 trillion KRW) surpassing HE sales (16.4331 trillion KRW), and the sales gap between the two sectors widened from 2.08 trillion KRW in 2017 to 9.08 trillion KRW last year. Operating profits were similar between the TV and home appliance sectors from 2016 to 2018, but last year, home appliances' operating profit exceeded that of TVs by 1.3829 trillion KRW.

For Samsung Electronics, the sales proportion of the Visual Display (VD) division, including TVs, in the CE sector was about 60% in 2016 but decreased to 57.5% last year. However, Samsung appears to have taken the lead in operating profit by maintaining a strong position in the TV market and showing remarkable growth in the home appliance sector, driven by the Bespoke series, which has gained popularity among young consumers such as newlyweds.

While Samsung Electronics has gained the upper hand in operating profit, LG Electronics leads in profitability. In terms of profitability calculated by operating profit margin relative to sales, LG Electronics recorded 9.4% last year, higher than Samsung Electronics' 7.4%. LG has led in profitability for seven years since 2014. This is likely due to expanding its business centered on premium TV products with high profitability, resulting in a higher operating profit margin relative to sales.

This year, the two companies are expected to compete in the TV market not only with existing QLED and OLED TVs but also with mini LED TVs, and continue their rivalry in the home appliance market, with LG focusing on steam appliances and Samsung emphasizing customized preference appliances through its Bespoke line.

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