LG Electronics Achieves Record Q2 Sales Through B2B Expansion... Automotive Sector Posts Loss Due to One-Time Costs

LG Electronics announced its confirmed results for the second quarter of this year, reporting consolidated sales (including LG Innotek) of KRW 19.9984 trillion and operating profit of KRW 741.9 billion, achieving higher profits than Samsung Electronics for two consecutive quarters. In an environment where uncertainties remain due to ongoing tightening policies in major countries and prolonged geopolitical risks, efforts to continuously improve business structure and cost structure proved effective.

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On the 27th, LG Electronics stated that second-quarter sales increased by 2.7% compared to the same period last year, reaching KRW 19.9984 trillion. This was only a 2.0% decrease compared to the first quarter. Despite delayed demand recovery due to the global economic slowdown and intensified competition, the expansion of the B2B segment such as automotive components and heating, ventilation, and air conditioning (HVAC) in terms of business structure contributed effectively, resulting in the highest sales figure ever recorded for the second quarter.

Operating profit was KRW 741.9 billion, down 6.3% from the second quarter of last year. It decreased by 50.5% compared to the first quarter of this year and was lower than the previously announced provisional operating profit of KRW 892.7 billion for the second quarter. One-time costs related to voluntary retirement programs conducted at the beginning of the year and increased recall material costs for General Motors (GM) ‘Chevrolet Bolt EV’ had a significant impact.

Performance and Outlook by Division

The most profitable business division was H&A (Home Appliances). It played a decisive role in achieving the highest second-quarter performance with sales of KRW 7.9855 trillion and operating profit of KRW 600.1 billion. In particular, operating profit increased by nearly 40% compared to the same period last year, successfully improving profitability. Proactive efforts to stabilize cost structures such as raw material and logistics costs contributed to achieving high profitability. The operating profit margin also improved to 7.5% in the second quarter, compared to 5.4% in the second quarter of last year.

Although the market environment in the third quarter is not bright due to decreased demand for home appliances and intensified competition among companies, LG plans to continue efforts to improve profitability by strengthening new products, expanding affordable product lines, maintaining stable raw material prices, and further reducing maritime freight costs in the second half of the year. Additionally, LG plans to leverage various high-efficiency technologies secured in the electrical and electronic fields such as heat pumps and energy storage systems (ESS), mainly in advanced markets like North America and Europe, to achieve results in the HVAC business.

The HE (Home Entertainment) division, responsible for the TV business, recorded sales of KRW 3.1467 trillion and operating profit of KRW 123.6 billion in the second quarter. Although sales decreased compared to the second quarter of last year, profitability improved by continuing efficient business operations in response to demand slowdown in key markets due to geopolitical issues in Europe. Efficiency in marketing expenditure and diversification of revenue structure through growth in platform-based content and service businesses with high profitability supported profitability improvement.

Going forward, LG plans to accelerate its transition to media and entertainment platform businesses. In the third quarter, it will further strengthen the webOS TV lineup and continue efforts to expand content experiences. It will also lead the ultra-large premium TV market by officially launching the world’s first wireless OLED TV, the 97-inch ‘LG Signature OLED M.’ The lifestyle screen ‘LG StanbyMe Go,’ which has received positive customer responses since its domestic launch, will expand to overseas markets in the third quarter.

Automotive Division Posts Loss Due to One-Time Costs

The VS (Vehicle Solutions) division, which handles the automotive business, achieved the highest sales and operating profit ever recorded for the second quarter with sales of KRW 2.6645 trillion and operating profit of KRW 89.8 billion. However, during the recall process of GM’s ‘Chevrolet Bolt EV’ that occurred in 2021, one-time costs of KRW 151 billion related to increased vehicle parts material costs were reflected in the second-quarter results, ultimately resulting in an operating loss of KRW 61.2 billion.

The VS division’s order backlog is expected to approach KRW 100 trillion by the end of the year. As the order backlog is gradually converting into sales, high-speed growth can be anticipated in the future. LG Electronics plans to actively explore new opportunities in future mobility areas such as autonomous driving, software (SW) solutions, and content in response to trends like vehicle electrification and connected services, while continuing growth based on a portfolio centered on three pillars: vehicle infotainment, e-powertrain, and lamps.

The BS (Business Solutions) division recorded sales of KRW 1.3327 trillion and operating profit of KRW 2.6 billion in the second quarter. Entering the third quarter, it expects IT product demand to gradually recover compared to the first half and plans to actively expand sales of premium monitors and laptop products equipped with gaming-specialized features and OLED displays.

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