LG Electronics Achieves Record Quarterly Performance Driven by Pent-up Demand... "No Issues" Despite Semiconductor Crisis (Comprehensive)

[Asia Economy Reporter Suyeon Woo] LG Electronics recorded its highest-ever quarterly performance in the first quarter of this year, driven by increased non-face-to-face demand due to COVID-19 and the pent-up effect. The expansion of sales in the Home Appliance and VS Business Divisions improved the overall company performance. From the second quarter, the company plans to proactively address component supply issues such as the semiconductor shortage and continue uninterrupted production.

On the 29th, during the announcement of the first quarter results, Kim Jooyong, Head of VS Management, stated, "The current supply disruption of automotive semiconductors is expected to continue for a considerable period, and from the second quarter, risks are anticipated at some clients." He added, "We will secure as many semiconductor components as possible through cooperation with partners, but related costs for product diversification are expected to increase."

However, despite the semiconductor supply shortage causing production disruptions in the finished car industry, he forecasted that LG Electronics' VS Business Division's plan to achieve profitability in the second half of this year will proceed without issues. He also dismissed concerns about production disruptions in other product groups, such as TVs and home appliances, where semiconductors are key components, due to the semiconductor shortage.

An LG Electronics official added, "Adequate inventory of DDI chips used in TVs has been secured, and we are in close consultation with suppliers, so there is little need to worry about semiconductor supply shortages affecting TVs."

Additionally, the VS Business Division, which saw a 43% increase in sales compared to the previous year in the first quarter, has attracted attention ahead of the planned establishment of a joint venture (JV) with Magna in the second half of this year. LG Electronics expects the electric vehicle parts market size to grow at an average annual rate of 35% from about 10 trillion KRW last year to 2025. The order backlog of the VS Business Division is expected to be around 60 trillion KRW by the end of this year.

Kim said, "LG Magna is expected to grow more than 50% by 2025, outperforming the market." He added, "Considering the time from project orders to mass production, sales synergy is expected to accelerate after 2024."

Meanwhile, LG Electronics announced confirmed first-quarter results for this year, recording consolidated sales of 18.8095 trillion KRW and operating profit of 1.5166 trillion KRW. These figures represent increases of 27.7% and 39.1%, respectively, compared to the same period last year. In terms of sales, this marks the second consecutive quarter of record-high sales following the previous quarter, and in terms of operating profit, it is the first time in 11 years and 3 quarters since the second quarter of 2009.

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