LG Achieves Strong Q3 Profit amid Market Challenges

LG Electronics Inc. (LG) has announced a remarkable third-quarter 2024 consolidated revenue of KRW 22.18 trillion, marking the highest revenue ever recorded for a third quarter. The company also achieved an operating profit of KRW 751.9 billion, ranking as the fourth highest in its history.

Despite facing external pressures, including a prolonged recovery in market demand and ongoing geopolitical conflicts, LG has managed to achieve year-over-year revenue growth for four consecutive quarters. The rise in global shipping expenses and other cost increases, however, posed significant challenges.

To counter these issues, LG has upgraded its business portfolio, transforming its operational methods and expanding its B2B operations. These initiatives have allowed the company to partially offset rising costs while maintaining a solid operating profit, showcasing its fundamental competitiveness.

Looking to the future, LG aims to accelerate its business transformation by expanding home appliance subscriptions, direct-to-consumer (D2C) sales, and volume zone product sales. The company also plans to foster steady growth in the B2B sector while expanding platform-based content and services.

The LG Home Appliance & Air Solution Company generated third-quarter revenue of KRW 8.34 trillion and an operating profit of KRW 527.2 billion, reflecting a year-over-year increase of 11.7 percent in revenue and 5.5 percent in operating profit. Despite the challenging market conditions, LG’s home appliance business has outperformed its competitors, benefiting from the growth of its subscription model and B2B HVAC operations. While increased logistics costs impacted operating profit in the latter half of the year, strong revenue growth and robust manufacturing capabilities allowed the company to exceed last year’s results.

For the fourth quarter, market conditions are expected to gradually improve, with positive trends in leading economic indicators and interest rate reductions. LG plans to diversify its home appliance lineup and pricing strategies to capture growing demand in emerging markets while continuing to expand new businesses like subscriptions and D2C sales.

The LG Home Entertainment Company reported third-quarter revenue of KRW 3.75 trillion and an operating profit of KRW 49.4 billion, a 5.2 percent increase from the previous year, driven by higher shipments in Europe, a key market for OLED TVs. However, the company faced significant cost pressures due to rising LCD panel prices. The ongoing growth of the webOS-based content and services business has helped mitigate the overall profit impact.

In the fourth quarter, LG anticipates slight growth in the TV market, particularly in entry-level products. The company plans to adapt flexibly to changes in demand and accelerate growth by expanding webOS partnerships to enhance its user base.

The LG Vehicle Component Solutions Company posted third-quarter revenue of KRW 2.61 trillion and an operating profit of KRW 1.1 billion. While revenue increased year-over-year, it saw a slight decrease from the previous quarter, attributed to a slowdown in electric vehicle (EV) demand. Increased R&D expenses for securing software-defined vehicle (SDV) technology and investments for mass production also impacted operating profit.

The fourth quarter is expected to continue the growth trend compared to the same period last year and the previous quarter. However, growth may slow due to stagnant EV demand. LG plans to focus on strengthening its market position in key products like telematics, AVN, and motors, while improving operational efficiency and pursuing profitability.

The LG Business Solutions Company reported third-quarter revenue of KRW 1.40 trillion and an operating loss of KRW 76.9 billion. Revenue growth was driven by increased sales of strategic products, including gaming monitors and LED signage, along with large-scale B2B orders. However, the operating loss expanded due to rising LCD panel prices and increased logistics costs.

For the fourth quarter, demand for strategic product lines, including gaming monitors and LED signage, is expected to grow significantly. Rising interest in AI PCs is also anticipated to boost demand for premium laptops. Consequently, LG plans to enhance sales of strategic products while focusing on improving profitability through efficient operations.

Additionally, following a board resolution, LG has decided to discontinue its battery pack business. As a result, revenue and operating profit from this sector will be classified as discontinued operations in financial statements, leading to adjustments in past figures.