Sales of 22.1764 trillion KRW... Highest ever for Q3
Operating profit down 99% and 57% in Electric Vehicle & HE divisions respectively
Home appliances alone up 5.5%... "Growth in B2B HVAC and appliance subscription"
LG Electronics defended its operating profit in the third quarter of this year despite a sharp rise in logistics costs, thanks to the solid performance of its Home Appliance & Air Solution (H&A) business division.
LG Electronics announced on the 24th that it recorded consolidated sales of KRW 22.1764 trillion and operating profit of KRW 751.9 billion in the third quarter of this year. Sales increased by 6.7% compared to the same period last year, but operating profit decreased by 20.9%.
Regarding the third-quarter results, LG Electronics stated, "Operating profit was affected by increased costs due to rising global maritime freight rates caused by delayed market demand recovery, the Middle East conflict, and increased US tariffs on China."
It added, "Despite external environmental burdens, sales recorded the highest level ever for the third quarter. Through portfolio advancement such as changes in business methods and models and acceleration of business-to-business (B2B) operations, we achieved year-on-year sales growth for four consecutive quarters."
◆Home Appliances Defend Overall Operating Profit with Solid Performance= The Home Appliance & Air Solution (H&A) business division contributed significantly to defending the company’s performance by recording KRW 8.3376 trillion in sales and KRW 527.2 billion in operating profit in the third quarter. Sales increased by 11.7% year-on-year, and operating profit rose by 5.5%.
This was driven by rapid growth in the B2B Heating, Ventilation, and Air Conditioning (HVAC) business and home appliance subscription services. Despite the surge in logistics costs, cost improvement activities such as material cost reduction and productivity enhancement secured profitability above the same period last year.
LG Electronics plans to further expand its volume zone strategy and new businesses in the fourth quarter to boost demand in emerging markets.
◆TV Business: Sales Growth but Operating Profit Under Pressure= The Home Entertainment (HE) business division recorded KRW 3.7473 trillion in sales and KRW 49.4 billion in operating profit in the third quarter. Sales grew by 5.2% year-on-year, driven by increased OLED TV shipments in the European market.
However, operating profit fell by 57% year-on-year due to increased cost burdens from rising LCD panel prices. Nevertheless, growth in webOS content and service businesses minimized the impact on profitability.
In the fourth quarter, LG Electronics plans to strengthen market response centered on entry-level TV products and seek additional growth by expanding webOS partnerships to increase the user base.
◆Vehicle Components Business: Sales Growth but Profitability Slows= The Vehicle Components (VS) business division maintained growth with KRW 2.6113 trillion in sales in the third quarter.
However, operating profit plummeted 99% year-on-year to KRW 1.1 billion due to a slowdown in electric vehicle demand, upfront investments, and increased research and development (R&D) costs.
LG Electronics plans to strengthen its market position in key products such as telematics, AVN (Audio, Video, Navigation), and motors, while continuing efficient operations to improve profitability.
The promotional video for LG Electronics' latest campaign being displayed on the electronic billboard in Times Square, New York, USA Photo by LG Electronics
◆BS Business: Operating Loss Widens... Continued Investment in New Businesses= The Business Solutions (BS) business division, responsible for B2B operations, recorded KRW 1.3989 trillion in sales and an operating loss of KRW 76.9 billion in the third quarter.
Although sales of strategic products such as gaming monitors and LED signage increased, rising LCD panel prices and logistics cost burdens led to deteriorated profitability. Increased investments to nurture new businesses also contributed to the expanded loss.
In the fourth quarter, demand growth for AI PCs and premium laptops is expected, and performance improvement is anticipated through expanded sales of strategic products.
◆Outlook= LG Electronics expects a market rebound driven by economic recovery and interest rate cuts despite uncertain economic conditions in the fourth quarter.
The company will continue its volume zone strategy by diversifying home appliance lineups and price points to meet growing demand in emerging markets. It will maintain sales growth by expanding new businesses such as subscriptions and direct-to-consumer sales.
Considering the seasonal nature of increased marketing expenses, LG Electronics plans to continue efficient operations to secure profitability.
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