LG Electronics Considers Price Increases Amid U.S. Tariffs, Will Not Rush India IPO

After Q1 Earnings Announcement Conference Call
"Macroeconomic Uncertainty Due to U.S. Tariff Risks"
Utilizing U.S. and Mexico Plants to Avoid Tariffs

On April 24, LG Electronics stated regarding the Trump-era tariff risks, "We are continuously reviewing and responding to scenarios at the company-wide level," and added, "We are also considering responding through a certain level of price increases through discussions with distributors."

LG Twin Towers, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

During its first-quarter earnings conference call on the same day, LG Electronics said, "In the second quarter, global macroeconomic uncertainty is expected to persist due to risks associated with U.S. tariff policies and the resulting restructuring of global supply chains."

First, in terms of production site optimization, the company plans to maximize the use of its local factories in the United States and Mexico to avoid tariff increases. LG Electronics stated, "We plan to expand U.S. production by transferring washing machine and dryer volumes to our Tennessee plant," and added, "Based on the increased production, we expect to cover up to the high teens percentage of U.S.-bound home appliance sales."

The company further explained, "Regarding the possibility of expanding production and facilities within the United States in the future, we are currently comparing and reviewing the competitiveness of existing supply sites under various scenarios to respond flexibly to changes in U.S. trade policy."

Additionally, the company said, "For products manufactured in countries subject to high tariffs, we will operate an optimal production system based on a swing production model leveraging our global manufacturing network."

To respond to U.S.-imposed tariffs that will be fully implemented from the second quarter, LG Electronics is also considering a certain level of price increases. The company explained, "We already have a comprehensive roadmap prepared, including improvements in manufacturing costs and price increases to address the total tariff impact," and added, "Discussions with our customers regarding price increases have already been completed."

The company also stated, "If reciprocal tariffs become full-scale in the third and fourth quarters, the impact is expected to be significant," and added, "We plan to discuss the impact separately with our customers in the second quarter."

LG Electronics said, "By flexibly responding based on our production site system, we have the opportunity to actively compete without losing ground in the competitive landscape," and added, "We will continue to respond flexibly to market conditions and competition, and if necessary, we will also consider further price increases."

Regarding the timing of the Indian subsidiary's initial public offering (IPO), the company said it would not rush. LG Electronics stated, "Recently, interest from domestic and international investors in the growth potential of the Indian market has been increasing, and we recognize that market interest in our IPO has risen, especially after major domestic companies' IPOs in India," and added, "Rather than rushing the listing, we will comprehensively review the timing to maximize synergy effects before making a decision."

LG Electronics also expressed its expectations for the ES Business Division, established last year to strengthen its heating, ventilation, and air conditioning (HVAC) business, which it has positioned as a new growth engine. The company said, "Although there is uncertainty in the business environment, we expect the ES Business Division to maintain strong sales growth this year as well," and added, "Next year, we will aim to surpass 10 trillion won in annual sales and achieve an operating profit close to double digits."

The company further stated, "We are targeting more than 190% year-on-year growth in order volume for the data center business," and added, "To expand our business in North America, the leading global market, we are seeking to strengthen cooperation with other companies such as Microsoft (MS), and we plan to secure additional orders from other regions to expand our market presence."