LG Electronics' Self-Rescue Measures Work...Strong Q1 Performance and Bright Outlook for This Year's Results

LG Electronics' Preliminary Earnings Announcement Raises Market Expectations
LG Electronics: "Company-wide Efforts Reflect in Business Performance"
Brokerage Firms Forecast Earnings Growth This Year

LG Electronics recorded solid performance in the first quarter despite the global economic downturn. Market expectations suggest that LG Electronics improved profitability in home appliances while achieving results across all business sectors, including TV, automotive components, and business-to-business (B2B). There are also growing forecasts that performance could continue to rise in the second quarter and the second half of the year.

On the 10th, positive evaluations continued regarding LG Electronics' preliminary first-quarter results. The company’s self-help measures proved effective due to reduced logistics and raw material cost burdens, business structure advancement, and proactive inventory adjustments. Strengthening product positioning in the premium market for home appliances and increasing the proportion of B2B business, thereby establishing a stable revenue stream, were also positive factors.

Kim Rok-ho, a researcher at Hana Securities, assessed, "LG Electronics’ first-quarter results are not profits riding on favorable market conditions but achievements overcoming overall weak demand through its own efforts." He added, "The company overcame market difficulties through competitive strength in the premium market and proactive inventory management last year."

Park Kang-ho, a researcher at Daishin Securities, noted, "The increase in premium home appliance sales reflected the effect of improved product mix on the results." Lee Kyu-ha from NH Investment & Securities explained, "For TVs, cost reductions driven by proactive inventory adjustments and lower panel prices led to margin expansion, and despite increased costs from expanding the new plant in Mexico, the automotive components division maintained profitability through an expanded order backlog."

On the day of the earnings announcement, LG Electronics stated, "The company-wide efforts to fundamentally improve business structure and operational methods, such as the War Room task force, have translated into business results." It also emphasized, "From a business structure perspective, rapid growth in the automotive components sector and expansion of the B2B proportion continue," highlighting the effectiveness of the self-help measures.

In the securities industry, although detailed results have not been released since the earnings are preliminary, evaluations suggest that all major sectors?home appliances (H&A Business Division), TV (HE Business Division), and automotive components (VS Business Division)?showed positive outcomes. There are also forecasts that the growth trend in performance will continue into the second quarter and the second half of the year.

Kim Dong-won, a researcher at KB Securities, predicted, "Operating profit in the second quarter is expected to increase by 14.7% year-on-year to 908.5 billion KRW, driven by solid orders for home appliances and TVs, and an expanded profit scale in the VS and BS business divisions due to the increased B2B sales proportion." Kim Kwang-soo from Ebest Investment & Securities projected, "This year’s performance is expected to see sales increase by 2.4% to 85.4 trillion KRW and operating profit rise by 28.4% to 4.6 trillion KRW."

LG Electronics recorded an operating profit of 1.4974 trillion KRW in the first quarter, down 22.9% from the same period last year. During this period, sales decreased by 2.6% to 20.4178 trillion KRW. Although performance declined due to the global economic downturn, it exceeded existing market expectations. Considering that approximately 800 billion KRW of one-time patent income was included in operating profit in the first quarter of last year, LG Electronics explained that profitability has improved. In fact, the first-quarter operating profit is the third highest on a quarterly basis.

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