[EPS Prospects③] LG Electronics, World No.1 in Home Appliances Beyond Whirlpool... Growth Trajectory in Automotive Components Business

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[Asia Economy Reporter Lee Myunghwan] LG Electronics, which surpassed Whirlpool last year to achieve the highest sales revenue in the global home appliance market, is regarded as a representative stock expected to have a higher increase rate in earnings per share (EPS) than in operating profit growth this year.

According to the securities industry on the 31st, LG Electronics' consolidated sales revenue last year was KRW 74.7216 trillion, and operating profit was KRW 3.8638 trillion. While sales revenue increased by 28.7% compared to the previous year, operating profit decreased by 1.1%. The sales revenue was the highest ever on an annual basis, and it was the first time to exceed KRW 70 trillion. In particular, the sales of the Home Appliance & Air Solution (H&A) division exceeded KRW 27 trillion, surpassing Whirlpool with USD 2.348 billion (approximately KRW 2.6088 trillion), achieving the number one position in the global home appliance market.

An LG Electronics official explained, "Sales grew significantly thanks to the expansion of premium products such as hygiene appliances, space interior appliances, and OLED TVs, as well as growth in major overseas markets."

The securities industry analyzed that LG Electronics' Vehicle Component Solutions (VS) division will lead growth this year. Kangho Park, a researcher at Daishin Securities, said, "Although the VS division's operating profit turnaround is delayed, it is expected in the second half of 2022," adding, "Although automobile production disruptions due to semiconductor supply chain issues continue, they are gradually easing, and VS sales will enter a growth trajectory."

Dongwon Kim, a researcher at KB Securities, predicted, "The shortage of automotive semiconductors is expected to partially ease from the second half of this year, and global parts supply chain issues are also expected to gradually improve toward the end of the year," adding, "From a mid- to long-term perspective, expectations for the VS division's operating profit turnaround remain valid."

The outlook for the home appliance business unit, led by premium appliances, is also bright. Researcher Park said, "The growth and high profitability of H&A in 2022 are expected to be maintained," adding, "The expansion of the premium product ratio and diversification of new appliance composition will enhance competitiveness, and the increase in average selling price along with additional new sales will maintain its role as a cash cow."

Securities firms projected LG Electronics' EPS for this year to be in the mid-to-high KRW 10,000 range. KB Securities forecasted LG Electronics' EPS to reach KRW 16,985 this year and rise to KRW 18,555 next year. Daishin Securities estimated LG Electronics' EPS for this year and next year at KRW 16,005 and KRW 18,168, respectively.

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