LG Executive Mid-Year Report Card Shows Electronics and Ensol Smiled

LG Electronics Holds Steady, LG Energy Solution's 6-Quarter Uptrend
Accelerating Business Restructuring with 'Selection and Focus' DNA
Display and Innotek Face Improvement Challenges in Second Half

The expressions of the CEOs of LG affiliates who received their first half performance reports are mixed with joy and sorrow. Jo Joo-wan, President of LG Electronics, and Kwon Young-soo, Vice Chairman of LG Energy Solution, posted strong results in the first half. In particular, LG Energy Solution solidified its position as the second-largest company by market capitalization on the KOSPI, increasing its share from 5.93% on January 2 to 6.23% on August 11. On the other hand, CEOs of electronics affiliates such as Jung Ho-young of LG Display and Jung Cheol-dong of LG Innotek are reflecting deeply. LG Innotek fell out of the top 50 in market capitalization from January to August. They are determined to shake off the sluggishness and deliver good results in the second half.

Jo, who quickly applied LG Chairman Koo Kwang-mo’s management philosophy of ‘selection and concentration’ to the business, smiled upon seeing the first half results. Since being appointed CEO of LG Electronics in 2021, he has worked to cut loss-making businesses including mobile phones (2021) and solar panels (2022) and to expand new growth engines such as automotive components. Since last year, he declared emergency management and operated a war room like a command center to focus on business restructuring.

As a result, LG Electronics recorded sales of KRW 40.4143 trillion in the first half despite a difficult business environment. This marks breaking the KRW 40 trillion mark for two consecutive years. Operating profit for the first half was KRW 2.2393 trillion, exceeding KRW 2 trillion for three consecutive years. Considering one-off costs such as voluntary retirement in Q2 and a 94% plunge in operating profit from its consolidated affiliate LG Innotek, this is regarded as more than a solid performance. It posted nearly twice the operating profit of Samsung Electronics (KRW 1.24 trillion), which suffered from semiconductor business difficulties. LG has broken the old stereotype of being second in the electronics industry.

LG Energy Solution’s performance continues to rise. It recorded sales of KRW 17.5206 trillion and operating profit of KRW 1.0938 trillion in the first half. These figures soared 86.1% and 140.4%, respectively, compared to the first half of last year. Q2 sales marked a quarterly record high, showing six consecutive quarters of growth since its IPO in January last year. Tax credit benefits of KRW 211.2 billion (KRW 100.3 billion in Q1, KRW 110.9 billion in Q2) from the U.S. Inflation Reduction Act (IRA) Advanced Manufacturing Production Tax Credit (AMPC) significantly boosted operating profit.

Kwon Young-soo, Vice Chairman of LG Energy Solution, is credited with aggressive management leading to strong results. Since his appointment in 2021, he secured KRW 10 trillion in investment funds through the company’s IPO. He actively pursued customer-centric business by establishing joint ventures (JVs) with major automakers. In this year’s New Year’s address, he emphasized ‘strong execution capability.’ Recently, through large-scale investments, he is striving to secure competitiveness in key markets such as North America.

Shin Hak-cheol, CEO of LG Chem, received somewhat disappointing results in the first half. Sales reached KRW 29.0278 trillion with operating profit of KRW 1.4066 trillion. Sales increased 21.8% compared to the first half of last year, but operating profit decreased by 26.1%. In Q2, the core petrochemical business posted an operating loss of KRW 12.7 billion. The effect of China’s reopening was less than expected, reducing demand and margins for petrochemical products.

The situation was worse for LG Display and LG Innotek in the first half. LG Display posted an operating loss of KRW 1.0984 trillion in Q1 and continued with an operating loss of KRW 881.5 billion in Q2. However, the operating loss narrowed by 19.75% in Q2. LG Innotek managed only KRW 163.7 billion in operating profit in the first half. Its market capitalization ranking dropped from 50th on January 2 to 59th on August 11. Nevertheless, it avoided a Q2 loss contrary to initial market expectations.

Jung Ho-young, President of LG Display, and Jung Cheol-dong, President of LG Innotek, are aiming for a turnaround in the second half. LG Innotek’s performance is generally better in the second half because it is the period when it actively supplies parts such as camera modules to Apple (which accounted for 77% of last year’s sales) iPhones. Jung is also focusing on expanding new businesses to move away from the Apple-centric business structure. He is increasing the business portfolio in the automotive components sector, which has emerged as a core LG business. Park Kang-ho, a researcher at Daishin Securities, commented, “It is time to pay attention to the growth in automotive camera sales,” adding, “An increase in market share among customers and the effect of new model launches are expected.”

LG Display is also highly anticipated to supply OLED panels for the iPhone 15 series launching this fall. The market expects that with Chinese display maker BOE excluded from supplying panels for the new iPhone, both Samsung Display and LG Display will benefit. Securities firms predict LG Display could return to profitability in Q4. The average operating profit forecast for LG Display compiled by financial information provider FnGuide is KRW 86.4 billion.

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