LG Electronics Returns to Loss After 9 Years... Performance Rebound Expected This Year (Comprehensive)

Preliminary Q4 Results for Last Year Announced
First Operating Loss Since Q4 2016
Costs Driven by Weak TV Demand and Voluntary Retirement
Annual Sales Hit 'All-Time High'
"Focusing on B2B and Other Sectors for Profitability-Based Growth"

LG Electronics broke its all-time annual sales record, but due to sluggish demand in its TV business and one-off costs, the company posted a quarterly operating loss for the first time in nine years. However, as last year’s cost burdens have been largely addressed, the industry expects LG Electronics to improve profitability and achieve a performance rebound this year, driven by growth businesses such as vehicle components and heating, ventilation, and air conditioning (HVAC).

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

On January 9, LG Electronics announced that its consolidated operating loss for the fourth quarter of last year was 109.4 billion won, turning to a deficit compared to an operating profit of 135.4 billion won in the same period the previous year. This marks the company’s first quarterly loss since the fourth quarter of 2016, when it posted an operating loss of 35.2 billion won. Revenue for the fourth quarter of last year was 23.8538 trillion won.

On an annual basis, however, LG Electronics set a new record for highest-ever sales. The company’s cumulative revenue for last year reached 89.2025 trillion won, an increase of 1.7% year-on-year. Operating profit was provisionally tallied at 2.478 trillion won, down 27.5% from the previous year.

Profitability was impacted by delayed recovery in demand for display products and increased marketing expenditures due to intensified market competition. From the second half of the year, additional costs were incurred from voluntary retirement as part of workforce restructuring. According to the securities industry, costs related to voluntary retirement are estimated to have reached about 300 billion won. LG Electronics explained, “In the mid- to long-term, this will help alleviate the burden of fixed costs.” A company representative added, “The tariff burden stemming from the United States is expected to persist this year, but through efforts to improve production site efficiency and operations, we were able to offset a significant portion of last year’s tariff costs. We plan to continue minimizing the impact on profitability this year as well.”

LG Electronics plans to strengthen growth areas such as B2B (business-to-business) including vehicle components and HVAC, non-hardware sectors such as webOS and maintenance, and D2C (direct-to-consumer), thereby building a growth structure based on profitability. Last year, qualitative growth areas accounted for nearly half of the company’s total sales.

The company’s core home appliance business is expected to have achieved record-high sales. LG Electronics maintained dominance in the premium market and delivered stable results in the volume zone segment. Its subscription business, which combines products and services, was also evaluated to have shown steady growth. This year, the company plans to focus even more on B2B areas, such as the built-in appliance business and component solution businesses like motors and compressors.

Display product-based businesses, including TV, IT, and ID, are expected to post an annual loss due to sluggish demand and increased marketing costs resulting from intensified competition. However, the webOS platform business, which serves a base of 260 million devices worldwide, achieved double-digit growth last year. LG Electronics intends to further strengthen its platform business by securing high-quality content and expanding its lifestyle TV lineup. The company will also continue efforts to discover new demand, especially in growth markets in the Global South.

The vehicle component business is expected to have achieved record-high sales and operating profit last year. This is attributed to increased sales of high value-added products as the premium trend in automotive infotainment continues, along with efforts to improve operational efficiency. This year, LG Electronics aims to continue its growth based on a strong order backlog and focus on strengthening capabilities in artificial intelligence-driven vehicles (AIDV), going beyond software-defined vehicles (SDV).

The HVAC business will continue to pursue future business opportunities in the AI data center (DC) cooling solutions sector, leveraging its comprehensive cooling technologies that cover both air and liquid cooling.