Overcoming Recession: 3rd Quarter Sales and Operating Profit Rank 2nd All-Time
Accelerating 'Qualitative' Business Growth... Operating Profit Up Over 30%
LG Electronics achieved its highest-ever operating profit for the third quarter, driven by strong performance in its home appliances and automotive components (electric and electronic devices for vehicles) businesses. Overcoming the recession, both sales and operating profit ranked second highest ever for the third quarter. In particular, the automotive components sector is expected to emerge as a core business for the company by achieving annual sales of 10 trillion KRW this year.
LG Electronics announced on the 10th that its consolidated operating profit for the third quarter was preliminarily estimated at 996.7 billion KRW, a 33.5% increase compared to the same period last year. It rose 34.3% from the previous quarter, the second quarter, which recorded 741.9 billion KRW. The third quarter operating profit was the second highest following 1.0738 trillion KRW in 2020.
Sales amounted to 20.7139 trillion KRW. This was a 2.2% decrease from last year’s record high for the third quarter (21.1768 trillion KRW), ranking second highest ever. Both sales (20.4624 trillion KRW) and operating profit (808.4 billion KRW) exceeded securities analysts’ estimates.
Regarding the third quarter results, LG Electronics stated, "These are favorable results reflecting overcoming the recession and accelerating qualitative growth of the business portfolio." They explained that expanding the proportion of business-to-business (B2B) sectors such as automotive parts and HVAC (heating, ventilation, and air conditioning), based on customer understanding accumulated from consumer businesses, proved to be successful.
Cho Ju-wan, CEO of LG Electronics, presenting the company's vision and business strategy at the LG Electronics press conference held on July 12 at LG Science Park in Magok-dong, Gangseo-gu, Seoul. [Photo by Yonhap News]
The strong performance was led by the home appliances and automotive components sectors. LG Electronics explained that in the home appliances business, targeting the volume zone and expanding the B2B share with system air conditioners and other HVAC products significantly contributed to the strong results. The automotive components business secured profitability through stable supply chain management.
The TV business overcame declining demand and maintained profitability. The business solutions sector saw reduced sales and lower profitability due to decreased IT demand. However, they continued to innovate customer experience through premium IT lineups such as customized commercial displays and foldable laptops.
For the automotive components business, LG Electronics expects to achieve an order backlog of 100 trillion KRW by the end of the year and annual sales of 10 trillion KRW. The company is accelerating the establishment of regional production bases, recently announcing plans to build the fourth LG Magna e-Powertrain production facility in Miskolc, Hungary. LG Electronics stated, "We expect the automotive components business to smoothly establish itself as a core business leading the overall growth of the company in the near future."
The strong performance in the automotive components business aligns with the '2030 Vision' announced by CEO Cho Joo-wan in July. CEO Cho stated that sales will increase to 100 trillion KRW by 2030, focusing on B2B growth, innovation in non-hardware business models, and securing new business drivers. LG Electronics said, "Overcoming the recession and achieving solid sales and high operating profit in the third quarter is evidence that the work to advance the future business portfolio is progressing smoothly."
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