LG Electronics Q3 Revenue Hits 23.8 Trillion Won on Appliances, Auto Parts

LG Electronics (066570) lifted both revenue and operating profit in the third quarter, supported by steady earnings from its home appliance and automotive components businesses. Improved profitability in its television unit pushed cumulative operating profit past 4 trillion won for the first time through the first nine months of a year.

The company said on the 7th that preliminary third-quarter revenue on a consolidated basis came to 23.83 trillion won ($16.7 billion) and operating profit to 781.8 billion won ($549 million). The figures are up 8.9% and 13.5%, respectively, from the same period a year earlier.

Despite continued external uncertainty, including conflict in the Middle East, core businesses such as home appliances and automotive components drove overall revenue growth by expanding sales in the Global South and in business-to-business markets.

Profitability improved faster than revenue. The home appliance and automotive components units delivered stable profits in the business-to-consumer and business-to-business segments, respectively, while the television business posted a significant improvement in profitability from a year earlier. LG Electronics said cost structure improvements and operating leverage from higher revenue offset much of the burden from rising logistics, materials and fixed costs.

As a result, both revenue and operating profit have grown year-on-year in every quarter this year. Nine-month revenue reached 71.38 trillion won ($50.1 billion), up 9.2% from a year earlier, while cumulative operating profit rose 55.9% to 4.03 trillion won ($2.83 billion). This is the first year the company has topped both 70 trillion won in revenue and 4 trillion won in operating profit over the first nine months.

By business, the home appliance unit extended its earnings recovery on a two-track strategy targeting both premium and mid- to low-priced markets, combined with growth in appliance subscriptions, online sales and business-to-business operations. Gains in manufacturing and logistics efficiency also helped defend margins.

The media and entertainment business grew in scale as sales of premium products such as OLED televisions increased and revenue from emerging markets expanded. The webOS platform business also continued to grow. The unit stayed in the black, helped by a higher share of premium product sales and more efficient marketing spending.

The automotive components business contributed to the earnings gain as its existing order backlog converted steadily into revenue and the premium share of in-vehicle infotainment products increased.

The Eco Solution business, which covers heating, ventilation and air conditioning, kept revenue at year-earlier levels as overseas sales increased. Profitability, however, declined slightly from a year earlier as the company continued investing in future businesses, including new production capacity, and added staff for those operations.

LG Electronics plans to channel the cash generated by its established businesses into investment in future growth areas. To meet rising demand for cooling solutions for artificial intelligence data centers, it is upgrading production sites at home and abroad and expanding capacity. Investment in robotics is also moving into full swing. The company is building the country's largest data factory in Seoul's Yangjae district and is setting up mass-production infrastructure in Changwon, South Gyeongsang Province, for actuators, a core robot component.

The company also plans to accelerate a shift toward a profit-focused business structure by expanding sales of premium products and developing high-margin business-to-business operations.

The results are preliminary figures under the Korean International Financial Reporting Standards. LG Electronics will hold an earnings call later this month to disclose third-quarter net profit and detailed results by business division.