LG Electronics Achieves Record Q2 Sales and Automotive Division Profit... Profitability Worsens (Comprehensive)

Q2 Revenue 19.464 Trillion KRW, Operating Profit 792.2 Billion KRW
Business Uncertainty Continues in Q3

[Asia Economy Reporter Park Sun-mi] LG Electronics achieved its highest sales for the second quarter, but overall profitability worsened due to rising raw material prices and increased logistics costs. However, the automotive components business recorded its highest quarterly sales ever and posted its first quarterly profit in 26 quarters since Q4 2015, which is seen as encouraging. LG Electronics forecasted that business uncertainties will continue in Q3 this year due to prolonged geopolitical risks, inflation, and weakening consumer sentiment.

Profitability Deteriorates Despite Record Second Quarter Sales

On the 29th, LG Electronics announced consolidated sales of KRW 19.464 trillion and operating profit of KRW 792.2 billion for the second quarter of this year. Sales were the highest ever for a second quarter, up 15.0% year-on-year. However, operating profit decreased by 12.0%. The operating profit margin was 4.1%, down 1.2 percentage points compared to the same period last year.

By business division, the H&A Business Division, responsible for home appliances, recorded sales of KRW 8.0676 trillion and operating profit of KRW 432.2 billion. Sales were the highest ever for a quarter, increasing 18.4% year-on-year, and surpassed KRW 8 trillion for the first time as a single business division. Growth was seen mainly in advanced markets such as North America, driven by the popularity of premium products including LG Objet Collection for space interior appliances, new appliances, and steam appliances, which supported the H&A Business Division’s performance.

However, the H&A Business Division’s operating profit declined compared to the same period last year due to rising raw material prices and increased logistics costs.

The HE Business Division, responsible for TVs, recorded sales of KRW 3.4578 trillion and an operating loss of KRW 18.9 billion. Sales decreased 14.5% year-on-year due to a sharp decline in global TV demand. The operating loss was caused by the sales decline and increased marketing expenses amid intensified competition among companies.

The VS Business Division, the automotive components sector, posted sales of KRW 2.0305 trillion and operating profit of KRW 50 billion. Sales in the automotive components business, which LG Electronics is nurturing as a growth business, increased 19.4% year-on-year to a record high for a quarter, surpassing KRW 2 trillion for the first time. This was mainly due to systematic supply chain management that actively responded to additional demand from automakers as vehicle semiconductor supply issues gradually eased.

Operating profit turned positive thanks to sales growth in infotainment, electric vehicle powertrain, and automotive lighting systems, along with continuous cost structure improvements. This marks the first quarterly profit in 26 quarters since Q4 2015.

The BS (Business Solutions) Business Division recorded sales of KRW 1.5381 trillion and operating profit of KRW 14.3 billion. Despite decreased demand for IT products, sales grew 4.2% year-on-year due to steady monitor sales and a continued recovery in the B2B market. Operating profit declined compared to the same period last year due to rising raw material prices and increased logistics costs.

Challenging Business Environment in Q3... Securing Profitability is Key

LG Electronics plans to prioritize customer value and strengthen its core competitiveness to secure stable profitability.

First, it will continue premium sales growth and expand coverage of entry-level products to further strengthen its global market dominance in core businesses such as home appliances and TVs. Additionally, it will pursue growth based on profitability by expanding sales in the automotive components business, a future growth engine, and activating content and advertising revenue.

Specifically, the H&A Business Division plans to continue expanding premium product sales while strengthening competitiveness in volume zone (mass sales) models to solidify market dominance and maintain profitability through ongoing cost competitiveness activities. The global TV market is expected to see continued overall demand decline and intensified competition among companies.

The HE Business Division will focus on premium product sales centered on OLED TVs and actively respond to peak seasons such as the World Cup and Black Friday in the second half to expand sales. It will also efficiently manage marketing resources to secure profitability.

The VS Business Division will actively respond to demand expansion through strengthened cooperation with automakers and advanced supply chain management, maintain sales growth and profitability by continuously improving cost structure, and minimize risks from external uncertainties. The BS Business Division plans to maintain sales growth momentum and secure stable profitability by continuously discovering new projects and expanding orders with optimized solutions tailored to vertical (specific customer groups).

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