LG Electronics Q1 21 Trillion 'Record High Sales'...Rising Expectations for Auto Parts Business

Difficult to Specify Timing for Jeonjang Business Profit Turnaround but Nearing Breakeven Point

[Asia Economy Reporter Park Sun-mi] Korea's 'home appliance powerhouse' LG Electronics recorded its highest-ever quarterly performance in the first quarter of this year, driven by strong sales of premium products such as the Objet Collection and OLED TVs. Having consecutively exited the smartphone and solar power businesses, LG Electronics plans to focus on expanding profitability by strengthening the global market dominance of its core businesses, including premium home appliances and TVs, while also increasing the contribution of its automotive components business, which is approaching the break-even point (BEP).

On the 29th, LG Electronics announced through its 2022 first-quarter earnings release and conference call held the previous day that it achieved consolidated sales of KRW 21.1114 trillion and operating profit of KRW 1.8805 trillion. Sales increased by 18.5% compared to the same period last year, marking the largest quarterly scale. Operating profit also recorded a quarterly high, rising 6.4% year-on-year, positively influenced by temporarily increased patent income.

By business division, the H&A Division (home appliances) posted record-high sales of KRW 7.9702 trillion. Sales increased by 18.8% due to the rise in premium product sales, including the Objet Collection, new home appliances, and steam appliances. The HE Business Division (TV, audio) also achieved sales of KRW 4.0649 trillion, continuously exceeding KRW 4 trillion in quarterly sales since the fourth quarter of 2020, despite stagnation in the global TV market growth. This was also partly due to the steady popularity of premium product lines such as OLED TVs and large-sized TVs.

LG Electronics expects the management environment to become more challenging in the second quarter of this year due to ongoing uncertainties such as geopolitical issues, inflation concerns, exchange rate fluctuations, and supply chain risks, which will lead to cost increases like rising raw material prices and logistics expenses. The company plans to focus on securing profitability by further solidifying the global market dominance of its core businesses, including premium home appliances and TVs.

Additionally, LG Electronics will strive to achieve meaningful results in its future growth engine, the VS Business Division (automotive components), while increasing investments in future businesses such as artificial intelligence (AI), robotics, and healthcare to advance its business portfolio. Regarding the automotive components division, which recorded an operating loss of KRW 6.3 billion in the first quarter, LG Electronics stated during the conference call that "the first-quarter performance was close to the break-even point," adding, "Due to factors such as semiconductor supply shortages, rising raw material prices, the Russia-Ukraine conflict, and China's lockdowns, sales volatility is significant, making it difficult to specify the exact timing of turning a profit, but we have expectations for a turnaround."

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