LG Electronics Achieves 1 Trillion KRW Operating Profit in Q3 Thanks to Home Appliances and Automotive Parts... Successful Structural Improvement for Steady Profitability (Update)

Expanding B2B Sales Share Including Battlefields by 30%
"Sales and Profit Growth Despite Economic Recession"

LG Electronics posted an operating profit approaching 1 trillion won in the third quarter, driven by its core business of home appliances and its future growth engine, the automotive electric and electronic equipment (EV/EE) business. The company successfully improved its business structure by increasing the proportion of business-to-business (B2B) transactions, which are less affected by economic fluctuations, thereby steadily boosting sales and profitability.

On the 27th, LG Electronics announced that its consolidated preliminary operating profit for the third quarter was 996.7 billion won, a 33.5% increase compared to the same period last year. Sales for the same period were 20.7094 trillion won, down 2.2%. The operating profit exceeded the securities market consensus estimate of 888.2 billion won, while sales were below the estimate of 23.1052 trillion won.

Operating profit rose 34.3% compared to the second quarter. Sales were similar to the record high for the third quarter last year (21.1768 trillion won). Operating profit from home appliances more than doubled year-on-year, and the EV/EE division achieved its highest quarterly operating profit. LG Electronics stated, "Despite economic slowdown and reduced demand, the expansion of B2B businesses such as EV/EE and heating, ventilation, and air conditioning (HVAC) drove sales growth."

LG Electronics said that the B2B business accounted for the mid-30% range of total sales this year. The B2B business is characterized by being less affected by economic cycles and able to steadily increase profits when securing high-quality customers.

LG Electronics plans to increase B2B sales to over 40 trillion won by 2030. One of the three key drivers of the '2030 Future Vision' announced by CEO Cho Joo-wan in July is the B2B growth strategy. The company aims to transform its business structure to secure stable sales and profitability even amid prolonged economic downturns.

Cho Ju-wan, CEO of LG Electronics, presenting the '2030 Future Vision' at LG Science Park in Magok-dong, Gangseo-gu, Seoul on July 12.
[Photo by Yonhap News]

Looking at the third-quarter performance by business division, the H&A (Home Appliances & Air Solutions) division recorded sales of 7.4574 trillion won and an operating profit of 504.5 billion won. Although marketing investments began just before the year-end peak season, the division secured profitability by enhancing production, procurement, and logistics competitiveness. It expanded its lineup in the volume zone (consumer markets with high demand) to overcome the risk of demand decline due to the recession.

The EV/EE (Vehicle Solutions) division set a new quarterly record with an operating profit of 134.9 billion won. Sales reached 2.5035 trillion won, the highest for a third quarter. LG Electronics said it expects to secure an order backlog close to 100 trillion won by year-end. Annual sales are expected to exceed 10 trillion won for the first time. The company plans to accelerate the transition to electric vehicles and respond to demand for high value-added parts. Full-scale operations at the LG Magna e-Powertrain production base in Ramos Arizpe, Mexico, are scheduled to begin in the fourth quarter. LG Electronics stated, "The EV/EE business is expected to become a core business leading the overall growth of the company."

The HE (Home Entertainment) division, responsible for the TV business, posted an operating profit of 110.7 billion won and sales of 3.5686 trillion won. Although demand recovery has been delayed, the division maintained profitability. The BS (Business Solutions) division recorded an operating loss of 20.5 billion won, with sales of 1.3309 trillion won, affected by decreased IT demand.

LG Electronics said it will continue to advance toward achieving the 'Triple 7' goals (7% average annual growth rate, 7% operating profit margin, and more than 7 times corporate value) presented alongside the 2030 Future Vision. Next year, the company plans to accelerate its global market entry in the electric vehicle charging sector. In the fourth quarter, the year-end peak season, LG Electronics intends to increase sales of key products and expand B2B businesses, including EV/EE, to boost revenue.