Annual Operating Profit 3.4 Trillion KRW Down 6%
Annual Sales Set New Record High
LG Electronics' operating profit in the fourth quarter of last year fell significantly short of market expectations. This was due to the sharp rise in global shipping costs in the second half of the year and increased business environment uncertainties, which led to one-time expenses for inventory normalization measures. Annual operating profit also decreased compared to the same period last year. However, by diversifying its business portfolio with home appliance subscriptions, D2C (Direct-to-Consumer), and B2B (Business-to-Business) sectors, the company achieved record-high annual sales.
LG Electronics announced on the 8th that its consolidated operating profit for the fourth quarter of last year was 146.1 billion KRW, down 53.3% from the same period last year. Sales increased by 0.2% to 22.7775 trillion KRW. The operating profit fell far short of the securities analysts' forecast of 397 billion KRW posted on the financial information provider FnGuide. Sales were close to the expected 22.5055 trillion KRW.
The operating profit declined compared to the same period last year due to increased logistics costs. Sales were at a similar level to the previous year. LG Electronics explained, "In the second half of last year, unexpected sharp increases in global shipping costs and one-time expenses related to inventory normalization measures, considering uncertainties in the business environment, somewhat affected profitability."
Annual operating profit was 3.4304 trillion KRW, down 6.1% from the previous year, while annual sales reached 87.7442 trillion KRW, up 6.7% over the same period, setting a new record.
Regarding the annual performance, LG Electronics stated, "Sales set a new record, and profitability (operating profit) remained at a stable level." The company believes it overcame the limitations of its existing home appliance sales business, which had been criticized for low profitability, by changing its business model to include home appliance subscriptions and D2C last year. The growth in the B2B business also contributed to increasing sales.
LG Electronics added, "Looking at the company's annual management performance, qualitative growth continues due to the restructuring of the business portfolio, which is positive. This year, LG Electronics will accelerate qualitative growth based on business portfolio innovation, strengthen fundamental competitiveness in quality and cost, and focus all efforts on optimizing fixed costs to secure a sound profit structure."
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