[Concall Summary] LG Electronics "Advancing Autonomous Driving Parts Business with European Automakers"

"Continued Risk in Automotive Semiconductors, Difficult for Electronics Business to Turn Profitable in Q1"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Hye-young] It has been confirmed that LG Electronics is conducting autonomous driving-related component business with major European automakers. LG Electronics forecasted that its automotive components business, regarded as a future growth engine, is unlikely to turn a profit in the first quarter of this year due to the impact of the vehicle semiconductor supply shortage.

Kim Ju-yong, head of LG Electronics VS Management, said at the earnings conference call held on the 27th, "Although we cannot disclose detailed project information, we are conducting autonomous driving-related component business targeting major European automakers and domestic companies," adding, "There have also been achievements in follow-up projects with European companies."

He continued, "There is a forecast that the autonomous driving business will be difficult to commercialize in the short term due to the need to secure technological reliability and social consensus and regulatory issues," and explained, "As the expansion of regulations related to in-vehicle autonomous driving solutions is expected in the European and U.S. markets, we are striving to meet customer requirements."

The VS Business Division of LG Electronics, responsible for the automotive components business, posted a loss of 53.6 billion KRW in the fourth quarter of last year due to production disruptions at automakers caused by the shortage of vehicle semiconductors. The company expects that the prolonged difficulty in securing vehicle semiconductors due to the global supply chain disruption will also make it difficult to improve related sales and profitability.

Kim said, "The VS business will increase sales through new projects and strengthen fundamental competitiveness, but profitability improvement will be limited due to the vehicle semiconductor risk," adding, "It is expected to be difficult to turn a profit in the first quarter of this year."

[Image source=Yonhap News]

LG Electronics announced that its annual sales volume of organic light-emitting diode (OLED) TVs nearly doubled compared to the previous year, exceeding its target.

Lee Jeong-hee, executive director of HE Management, said, "In the fourth quarter of last year, strong demand centered on North America and Europe grew by more than 60% compared to the previous year, and we exceeded our own targets," adding, "Annually, sales also rose more than twice compared to the previous year." He further stated, "Although the global TV market is expected to slightly contract compared to the previous year, the growth of premium products such as OLED TVs will be strong," and predicted that LG OLED TV shipments will increase further next year.

He added, "We cannot present a specific numerical target for OLED shipments this year, but we will continue to maintain our overwhelming market position."

There was also mention of competitor Samsung Electronics' Bespoke home appliances. Kim Yi-kwon, executive director of H&A Management, in charge of the home appliance business, said, "(Samsung) has converted its entire lineup to Bespoke, but LG Electronics has a balanced portfolio including space appliances Object Collection, ultra-premium brand Signature, and other individual brands," expressing confidence by saying, "We will continue to secure a competitive edge."

LG Electronics achieved sales of 27.1097 trillion KRW in the home appliance sector last year, surpassing U.S. competitor Whirlpool for the first time to become the world's number one in annual sales.

However, it forecasted that sales and profitability of the H&A Business Division may decline somewhat next year. Kim said, "Sales growth rate in the home appliance sector is expected to decline slightly compared to the previous year, and profitability will also decrease compared to the previous year due to increased costs such as raw material prices and logistics expenses," explaining, "By region, demand growth in North America is expected to slow compared to the previous year, but we will pursue sales expansion through differentiated products and supply stabilization, and in Europe, consumption levels are expected to remain unchanged, so we will continue to expand market share by increasing the range of products with good price-performance."

He added, "In the Korean market, activities such as the recently announced ‘UP (Eop) Appliances,’ new product launches, price increases, and cost improvement efforts will continue."