LG Electronics Operating Profit Twice That of Samsung Electronics... Bright Outlook for Q2 (Comprehensive)

LG Electronics Q1 Preliminary Earnings Announcement
Profitability Improvement Through Effective Market Response
Positive Outlook for Second Quarter and Second Half Performance

LG Electronics announced its preliminary earnings for the first quarter. Although both sales and operating profit decreased compared to the same period last year, the company was praised for holding its ground amid a weak global economy. It also surpassed Samsung Electronics' operating profit for the first time in 14 years.

In the market, there are expectations that LG Electronics improved profitability in home appliances during the first quarter, achieving results across all business sectors including TV, automotive components, and business-to-business (B2B). The securities industry also holds a positive outlook for the second quarter and the second half of the year.

LG Electronics' Q1 Operating Profit Twice That of Samsung Electronics... Effect of Profitability Improvement

On the 7th, LG Electronics announced preliminary results showing an operating profit of 1.4974 trillion KRW, down 22.9% in the first quarter. Sales during this period decreased by 2.6% to 20.4178 trillion KRW. Despite the decline due to the global economic downturn, the results exceeded previous market expectations and were considered resilient.

LG Electronics explained, "Considering that last year's first-quarter operating profit included temporary patent income, business profitability has significantly strengthened this year." In fact, this year's first-quarter operating profit is the third highest on a quarterly basis. Sales were also the second highest on a quarterly basis.

The market is paying attention to the fact that LG Electronics' operating profit surpassed Samsung Electronics' for the first time in 14 years. LG Electronics' operating profit is more than twice that of Samsung Electronics. Samsung Electronics' preliminary first-quarter operating profit, announced that morning, was 600 billion KRW, down 95.75% from the same period last year. Sales during the same period were 63 trillion KRW, down 19%.

While Samsung Electronics' performance shrank due to the semiconductor industry's worst-ever downturn, LG Electronics improved profitability through efforts such as easing logistics and raw material cost burdens, restructuring business operations, and proactive inventory adjustments. LG Electronics stated, "Company-wide efforts, including the War Room task force, to fundamentally improve business structure and operational methods have resulted in business achievements."

LG Electronics believes that early identification of market and customer needs related to high-efficiency and eco-friendly products such as heat pumps and ESS positively influenced the results. Efforts to maximize customer value by strengthening the product lineup and responding to the cost-effectiveness preference trend also contributed to the performance.

Additionally, increasing the proportion of the B2B business, which is relatively less affected by economic fluctuations, also helped the company hold its ground. In particular, the automotive components business, which turned profitable last year, continues to show sales growth based on a stable order backlog. The joint venture LG Magma (Powertrain) is also aiming for profitability this year by increasing customer volume.

Positive Outlook for Second Quarter and Second Half Earnings

The securities industry noted that although the results are preliminary and detailed figures have not been released, all major sectors including home appliances (H&A Business Division), TV (HE Business Division), and automotive components (VS Business Division) likely showed positive results. There is also a forecast that LG Electronics will record the most notable first-quarter earnings among electronics companies, supported by profitability improvements in the H&A and HE divisions.

No Geun-chang, a researcher at Hyundai Motor Securities, said, "Shipments of LG Electronics refrigerators, washing machines, and air conditioners sharply declined in the fourth quarter of last year," adding, "All three items likely improved in the first quarter compared to the previous quarter." He also noted, "With reduced logistics costs, the H&A operating profit margin likely improved to 11.4%. HE probably recorded an operating profit margin of 4.6% due to the Eurozone recovery and reduced marketing expenses."

The market expects LG Electronics to continue its earnings growth in the second quarter. Kim Dong-won, a researcher at KB Securities, predicted, "Second-quarter operating profit is expected to increase 14.7% year-on-year to 908.5 billion KRW, driven by strong orders for home appliances and TVs, and an expanded profit scale in the VS and BS business divisions due to increased B2B sales proportion."

There are also forecasts anticipating significant earnings growth in the second half of the year. Lee Kyu-ha, a researcher at NH Investment & Securities, said, "In the second half, a recovery in demand for home appliances and TVs, along with cost reduction effects in the automotive components division, could lead to a substantial increase in profits," adding, "We also expect to confirm strong growth in automotive order backlogs."

LG Electronics plans to announce detailed earnings at the earnings briefing scheduled for the end of this month, as the preliminary first-quarter results disclosed today are based on Korean International Financial Reporting Standards (K-IFRS) estimates.

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