Jo Ju-wan, President of LG Electronics, "Resolving Causes of Profitability Decline... Q1 Will Be Fine"

President Jo Joo-wan Holds Press Conference at CES 2023

[Las Vegas=Asia Economy Reporter Park Sun-mi] LG Electronics recorded an 'earnings shock' in the fourth quarter of last year, but President Cho Joo-wan expressed an optimistic response, stating that the fundamental causes of profitability deterioration are being resolved and that the company will show good performance starting from the first quarter of this year.

On the 6th (local time), President Cho held a press conference at CES 2023 in Las Vegas, USA, saying, "Although last year's sales grew in double digits, profits likely worsened compared to the previous year. However, cost-related adverse factors have been significantly alleviated since the fourth quarter of this year." He added, "Logistics costs, which had increased considerably last year, are returning to normal, so from the first quarter, we will be able to catch our breath from the logistics cost burden," and explained, "We can show good results starting from the first quarter of this year."

Along with improvements in external factors, he said that internally, they are well executing 'winning growth and growing change.' President Cho stated, "The automotive parts business succeeded in turning a profit for the first time in 10 years, and now only acceleration on the highway remains," adding, "The leading home appliance sector is maintaining its market share, and despite a sharp decline in TV demand, it is increasing the share of premium products." He further said, "The overall situation is not as serious as some fear and is positive," and added, "I am confident."

LG Electronics preliminarily reported that its consolidated operating profit for the fourth quarter of last year was 65.5 billion KRW, a 91.2% decrease compared to the same period last year. This is the first time in four years that quarterly operating profit has fallen below 100 billion KRW. The global economic recession has fully taken hold, leading to an overall decrease in product demand, compounded by rising raw material prices, increased logistics and marketing costs, and a sharp drop in the won-dollar exchange rate in the fourth quarter.

President Cho views the prolonged global economic recession and supply chain instability as no longer variables but constants in the management environment. He said, "It will be difficult for the economic downturn to end within the first half of the year, but we expect a gradual recovery centered on the North American region from the second half," and expressed optimism, "We believe a turnaround will be possible starting next year." He also added, "Since opportunities have always existed even in crisis situations, we will focus not on short-term cost reductions but on improving the business structure to continuously generate profits despite a prolonged recession and to build a competitive business structure."