LG Electronics Reports Strong Performance in Automotive and Premium New Appliances... Q3 Sales Hit Record 21.2 Trillion Won (Update)

TV Slump... HE Business Division Posts Loss for Second Consecutive Quarter

LG Group's headquarters building, LG Twin Towers, Yeouido, Yeongdeungpo-gu, Seoul. (Photo by LG)

[Asia Economy Reporter Moon Chaeseok] LG Electronics recorded its highest-ever third-quarter revenue of 21.1768 trillion KRW, driven by increased sales of premium products such as the 'Objet Collection' new home appliances in North America and Europe. The VS (Vehicle Components) Business Division, which is being intensively developed by LG Corporation CEO Koo Kwang-mo, also surpassed 2 trillion KRW in sales for the second consecutive quarter, generating over 2 trillion KRW in revenue. However, operating profit effectively declined due to demand contraction caused by intensified global inflation. In particular, the HE (Home Entertainment) Business Division posted losses for the second consecutive quarter as TV sales slumped amid decreased demand in Europe and other regions.

According to LG Electronics' preliminary consolidated earnings announcement for the third quarter on the 28th, revenue reached a record high of 21.1768 trillion KRW for the third quarter, up 14.1% compared to the same period last year. Operating profit was 746.6 billion KRW, a 25.1% increase year-on-year, but the actual profit margin shrank. Considering that the third quarter of last year included a provision of approximately 480 billion KRW related to the General Motors (GM) electric vehicle recall, operating profit effectively decreased.

Overall, the expansion of premium new home appliances such as the 'Objet Collection' series, which are space interior appliances, and increased sales of automotive parts by the VS division played a significant role. The H&A (Home Appliance & Air Solution) Business Division recorded third-quarter revenue of 7.473 trillion KRW, setting a new record for the third quarter. This was a 5.8% increase compared to the third quarter of last year. Operating profit was 228.3 billion KRW. An LG Electronics official explained, "Growth was seen in advanced markets including Korea, North America, and Europe compared to the third quarter of last year, and premium products centered on the Objet Collection and steam appliances drove the division's performance." They added, "Operating profit declined due to increased logistics costs and marketing expenses."

The VS Business Division, which CEO Koo is focusing on, posted third-quarter revenue of 2.3454 trillion KRW, a 45.6% increase year-on-year, setting a new record. Operating profit was 96.1 billion KRW. The vehicle components business is a growth engine that LG Electronics is nurturing. An LG Electronics official stated, "We surpassed 2 trillion KRW in sales for the second consecutive quarter through proactive responses to automakers' production expansions and effective supply chain management." They added, "Operating profit was achieved for the second consecutive quarter due to sales growth across all business areas including infotainment, electric vehicle powertrains, and vehicle lighting systems, as well as continuous cost structure improvements."

However, the HE Business Division recorded third-quarter revenue of 3.7121 trillion KRW and an operating loss of 55.4 billion KRW. Revenue decreased by 11.2% year-on-year. An LG Electronics official said, "Sales declined due to reduced global TV demand and weakened consumer sentiment in Europe caused by the prolonged Russia-Ukraine conflict." They added, "Operating losses occurred due to decreased revenue and increased marketing expenses amid intensified competition."

The BS (Business Solutions) Business Division posted third-quarter revenue of 1.4292 trillion KRW and an operating loss of 14.4 billion KRW. The 9.7% increase in revenue compared to the previous year was thanks to recovery in B2B market demand such as information displays. Operating loss was recorded due to rising raw material prices and increased logistics costs.

LG Electronics expects business uncertainties to continue into the fourth quarter. Inflation, weakened consumer sentiment due to interest rate hikes, and prolonged geopolitical risks are seen as variables. The company plans to continuously nurture new business models such as software (SW) platforms. In particular, the HE Business Division, facing intensified global competition, will focus on premium sales centered on OLED TVs to strengthen its competitive edge in the market.

The VS Business Division, nurtured by CEO Koo, plans to strengthen global supply chain management through close collaboration with automakers and parts suppliers while continuously improving cost structures and efficiently managing resources. An LG Electronics official expressed optimism, saying, "We expect to maintain a profit trend." For the core H&A division, the plan is to expand sales by enhancing competitiveness in premium and volume zone models. Profitability will also be improved through cost competitiveness enhancement and cost reduction activities aimed at improving the profit structure.

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