Home Appliance and Vehicle Component Units Drive Sales Past 10 Trillion Won
Headquarters building of LG electronics.
LG Electronics disclosed on April 29 that it posted consolidated revenue of 23.7272 trillion won (approximately $16.1 billion) and operating profit of 1.6737 trillion won in the first quarter of this year. Revenue increased 4.3% year-on-year, while operating profit rose 32.9% over the same period. Revenue marked an all-time high for a first-quarter result.
The results appear to have been driven by the company’s continued premium strategy in its core businesses including home appliances and TVs. Its vehicle component business, a key pillar of its business-to-business (B2B) operations, also maintained stable growth. According to LG Electronics, combined first-quarter revenue from the Home Solution (HS) Business Unit, which oversees home appliances, and the Vehicle component Solutions (VS) Business Division, which oversees vehicle components, exceeded 10 trillion won ($6.92 billion) for the first time.
LG Electronics’ B2B revenue in the first quarter came in at 6.5 trillion won, up 19% from the previous quarter and 1% from the same period last year. Revenue from its subscription business, which includes both product and service sales, reached 640 billion won in the first quarter.
Breaking down results by business unit, the HS Business Unit posted first-quarter revenue of 6.9431 trillion won and operating profit of 569.7 billion won. Revenue was the highest ever on a quarterly basis, and the HS Business Unit accounted for the largest share of the company’s total operating profit. The operating profit margin came in at 8.2%, a significant recovery from the previous quarter’s -2.6%.
This is attributed to the division’s strategy of simultaneously targeting both the premium and volume segments of the home appliance market in response to shifts in consumer demand, while also expanding its online sales and appliance subscription channels. LG Electronics plans to focus on securing profitability while continuing to nurture future growth drivers such as home robots and robot component businesses. During the earnings conference call on April 29, LG Electronics stated, “We are preparing to produce the initial volume of actuators for mass production in the first half of this year,” adding, “We aim to secure a lineup capable of meeting the diverse robot-type needs of various customers.”
The VS Business Unit set all-time quarterly records for both revenue and operating profit. The unit posted first-quarter revenue of 3.0644 trillion won and operating profit of 211.6 billion won. This was driven by the premiumization of in-vehicle infotainment solutions as well as increased sales, particularly to European automakers. Notably, the unit’s quarterly operating profit margin far exceeded 6% for the first time since its establishment.
The Media Entertainment Solution (MS) Business Unit, which handles TVs and other products, achieved revenue of 5.1694 trillion won and operating profit of 371.8 billion won. Operating profit swung to positive compared to the previous quarter. The results were supported by growth in the company’s own platform business, including webOS, as well as strong sales of premium products within its organic light-emitting diode (OLED) TV lineup. In the second quarter, the unit plans to focus on securing profitability while capitalizing on major sporting events.
The Eco Solution (ES) Business Unit, which is responsible for heating, ventilation, and air conditioning (HVAC) systems for artificial intelligence (AI) data centers, posted revenue of 2.8223 trillion won and operating profit of 248.5 billion won. Both revenue and operating profit declined due to weakened consumer sentiment stemming from conflicts in the Middle East and increased labor costs resulting from workforce expansion. The company plans to rapidly expand its order backlog on the back of stable market growth. An LG Electronics representative said, “The chiller business appears on track to achieve its target of 1 trillion won in annual revenue next year faster than expected,” adding, “Starting next year, we will build the foundation to enable full-scale order intake and revenue conversion in the data center cooling business.”
Kim Eun-jin
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