Order backlog 100 trillion·Sales 10 trillion green light... LG Electronics Automotive, Operating Rate 101.1% Record High

Surpassing 100% for 2 Consecutive Quarters
Record Highs for 6 Consecutive Quarters

LG Electronics announced on the 14th that the VS Business Division, which leads the automotive electric and electronic equipment business, recorded an all-time high average operating rate of 101.1% in the third quarter. This marks the second consecutive quarter surpassing 100%, following 100.2% in the second quarter.

According to LG Electronics' quarterly report, the VS Business Division's average operating rate in the third quarter was 101.1%, up 12.9 percentage points from 88.2% in the third quarter of last year.

The operating rate has been breaking records for six consecutive quarters since the first half of last year. It recorded 85.3% in the first half of last year, 88.2% in the third quarter, 89.9% in the fourth quarter, 99.0% in the first quarter of this year, 100.2% in the first half, and 101.1% in the third quarter. The average operating rate is the proportion of actual production volume relative to production capacity. An average operating rate of 100% means all production lines were fully operational.

Production capacity (capability) is also expected to increase. LG Electronics began full-scale operations at its Ramos Arizpe production base in Mexico starting from the third quarter. It is also establishing a production base in Hungary, aiming for operation in 2025.

LG Electronics CEO Jo Joo-wan visited the Magna booth at the "IAA Mobility 2023" exhibition held in Munich, Germany, on September 5 (local time), engaging in conversation with Marcus Knabel, Senior Marketing Manager of Magna International, Jorg Gottendorst, Senior Vice President, and Eun Seok-hyun, Vice President and Head of LG Electronics VS Business Division.
[Photo by Yonhap News]

In the third quarter of this year, the VS Business Division accounted for 12.4% of LG Electronics' total sales, approaching the all-time high of 12.5% recorded in the first half. The VS Division was launched in 2013. Last year, for the first time in nine years since its inception, it surpassed a 10% sales share. The sales shares of other business divisions in the third quarter were 38.4% for Home Appliances & Air Solutions (H&A), 16.5% for Home Entertainment (HE), and 6.8% for Business Solutions (BS).

LG Electronics' inventory assets increased by 6.0%, from KRW 9.3888 trillion at the end of last year to KRW 9.9485 trillion at the end of September this year. Inventory by business division was KRW 3.3063 trillion for Home Appliances, KRW 1.7282 trillion for Home Entertainment, KRW 39.2 billion for Business Solutions (BS), and KRW 28.2 billion for automotive electronics. The inventory turnover ratio, calculated by dividing sales by inventory assets, decreased from 6.6 times to 6.4 times. A higher turnover ratio indicates that inventory assets are being converted into sales more quickly.

Up to the third quarter of this year, LG Electronics' cumulative research and development (R&D) expenses amounted to KRW 3.0756 trillion, a 3.6% increase from KRW 2.9697 trillion during the same period last year. The proportion of R&D expenses to total sales also slightly increased from 4.8% to 5.0%. As of the end of September this year, LG Electronics' cumulative investment totaled KRW 2.8382 trillion, a 2.4% decrease compared to KRW 2.0991 trillion during the same period last year. By business division, the VS Business Division had the highest investment at KRW 573 billion, followed by H&A with KRW 406.6 billion, HE with KRW 142.4 billion, and BS with KRW 49.1 billion.

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