LG Electronics Posts Record Q1 Sales of 21 Trillion Won... Premium Strategy to Continue in Q2 (Comprehensive)

Premium Home Appliance Effect Worked
Premium Also Key to Overcoming Uncertain Domestic and Global Environment in Q2
Automotive Electronics Business Unavoidably Hit by Vehicle Semiconductor Supply Risk

[Asia Economy Reporter Park Sun-mi] LG Electronics announced its highest-ever quarterly earnings on the 28th, driven by strong sales of premium home appliances. The company once again solidified its position as a 'home appliance powerhouse' thanks to robust sales of premium products such as the Objet Collection and OLED TVs. However, the challenge remains in how much profitability can be maintained in the difficult business environment of the second quarter this year, amid ongoing uncertainties such as geopolitical issues, inflation concerns, exchange rate fluctuations, and supply chain risks.

Premium Home Appliance Effect 'Strong'...Achieves Record Sales

On the 28th, LG Electronics announced consolidated first-quarter sales of KRW 21.1114 trillion and operating profit of KRW 1.8805 trillion. Sales increased 18.5% year-on-year, marking the largest quarterly figure ever. Operating profit also rose 6.4% year-on-year, reaching a quarterly record, positively influenced by a temporary increase in patent income.

By business division, the H&A Division (home appliances) posted first-quarter sales of KRW 7.9702 trillion and operating profit of KRW 447.6 billion. Sales reached a quarterly record high, increasing 18.8% year-on-year due to increased sales of premium products such as the LG Objet Collection, new home appliances, and steam appliances. Sales grew evenly across all global regions, with particularly sharp growth in advanced markets centered on North America and Europe.

The HE Business Division (TV, audio, etc.) recorded sales of KRW 4.0649 trillion and operating profit of KRW 188.4 billion. Despite stagnation in the global TV market, sales slightly increased year-on-year due to steady popularity of premium products such as OLED TVs and large-sized TVs. The HE Business Division has continuously achieved quarterly sales exceeding KRW 4 trillion since the fourth quarter of 2020.

The VS Business Division (vehicle components) posted first-quarter sales of KRW 1.8776 trillion and an operating loss of KRW 6.3 billion. Sales increased 8.5% year-on-year as the division proactively responded to vehicle semiconductor supply issues and saw increased sales in infotainment, electric vehicle powertrains, and vehicle lighting systems. Despite intensified competition among suppliers, the VS Business Division is improving profitability through sales growth and cost reduction.

The BS Business Division (business solutions) surpassed KRW 2 trillion in quarterly sales for the first time. Sales increased 23.7% to KRW 2.0167 trillion, with operating profit reaching KRW 37 billion. The increase was influenced by rising new and replacement demand for IT products during the academy season and a gradual recovery in the B2B market. Despite price increases in key components and logistics costs, the BS Business Division achieved stable profitability due to strong sales of IT products and information displays.

However, while LG Electronics’ temporary increase in patent income positively impacted overall operating profit, operating profits by business division decreased year-on-year due to temporary cost expenditures. Costs related to organizational restructuring aimed at enhancing company-wide dynamism in the first quarter were reflected in each division’s results.

More Challenging Business Environment Due to Intensified Competition, Inflation, and Supply Chain Risks

LG Electronics expects the business environment to become more difficult in the second quarter due to ongoing uncertainties such as geopolitical issues, inflation concerns, exchange rate fluctuations, and supply chain risks, which will continue to drive cost increases such as raw material price hikes and logistics cost rises. Accordingly, the company plans to focus on securing solid profitability.

First, LG plans to further strengthen its global market dominance in core businesses such as home appliances and TVs, led by premium products. Additionally, the company will strive to achieve meaningful results in the future growth engine of the vehicle components business while increasing investments in future businesses such as AI, DX, robotics, and healthcare to advance its business portfolio.

The H&A Business Division has set a strategy to lead the home appliance market based on localization, leveraging differentiated competitiveness with new home appliances, the Objet Collection, UP appliances, and LG ThinQ.

The HE Business Division plans to focus on expanding sales of premium products such as OLED TVs, QNED TVs, and large-sized TVs, based on the expectation that demand for premium products will continue.

The automotive parts market is expected to face an uncertain environment due to ongoing vehicle semiconductor supply risks. Accordingly, the VS Business Division plans to respond flexibly to the supply situation of key components including vehicle semiconductors and actively pursue orders based on differentiated product competitiveness.

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