Sales of 14.7278 trillion won, operating profit of 1.0904 trillion won
Sales down 1.3% compared to last year, operating profit up 21.1%
Strong sales of steam-powered health appliances


LG Electronics surpassed Whirlpool in the U.S. with solid performance despite the COVID-19 pandemic.

LG Electronics announced on the 29th that it recorded consolidated sales of 14.7278 trillion won and an operating profit of 1.0904 trillion won in the first quarter.

Sales decreased by 1.3% compared to the same period last year, while operating profit increased by 21.1%. The operating profit margin (7.4%) is the highest ever for a first quarter, and this is the second time that first-quarter operating profit has exceeded 1 trillion won.

Looking at performance by business division, the H&A (Home Appliance & Air Solution) division achieved sales of 5.418 trillion won and an operating profit of 753.5 billion won. Although sales decreased slightly, operating profit and operating profit margin recorded their highest quarterly figures ever.

Sales decreased slightly compared to the same period last year as overseas sales declined due to the impact of COVID-19, despite continued strong sales of steam appliances such as dryers, stylers, and dishwashers in the domestic market driven by rising customer interest in health and hygiene. However, first-quarter sales exceeded 5 trillion won for the second consecutive year, following last year.

Operating profit increased by 3.6% compared to the same period last year, driven by expanded sales of premium products and cost reductions. The operating profit margin stood at 13.9%, the highest ever for a quarter.

Meanwhile, competitor Whirlpool recorded sales of $4.325 billion (approximately 5.3 trillion won), an operating profit of $260 million (approximately 320 billion won), and an operating profit margin of 6.0%. Sales fell by 9.1% and operating profit by 1.1% compared to the same period last year.

The Home Entertainment (HE) business division recorded sales of 2.9707 trillion won and an operating profit of 325.8 billion won. Compared to the same period last year, sales decreased by 4.8%, but operating profit increased by 31.7%.

Although sales decreased compared to the same period last year due to the suspension and downsizing of operations by major clients in North America and Europe, the operating profit margin reached 11.0% thanks to rising sales of premium products such as OLED TVs and cost efficiency measures like cost reduction. This marks the second time the company has achieved a double-digit operating profit margin in the first quarter, following 2018.

The Mobile Communications (MC) division recorded sales of 998.6 billion won and an operating loss of 237.8 billion won. Sales decreased by 33.9% compared to last year due to supply disruptions from Chinese ODM partners caused by COVID-19 and the temporary closure of some retail stores in Europe and Latin America. Although costs were reduced through production site efficiency improvements and reduced marketing expenses, the operating loss continued as smartphone sales declined.

The Vehicle Component Solutions (VS) business unit recorded sales of 1.3193 trillion won and an operating loss of 96.8 billion won. Sales fell 2.1% compared to the same period last year due to a decline in sales from the electric vehicle components business and the lamp business of its subsidiary, ZKW. Sales disruptions resulting from the suspension of factory operations by automakers in North America and Europe due to COVID-19 led to an operating loss.

The Business Solutions (BS) division recorded sales of 1.7091 trillion won and an operating profit of 212.2 billion won. Sales increased by 3.5% compared to the same period last year, driven by increased sales of IT products such as laptops and solar modules. Operating profit rose by 26.3% compared to last year, thanks to not only expanded sales but also the stable profitability of information displays.

LG Electronics stated that although it recorded the highest operating profit margin in its history for a first quarter despite the impact of COVID-19, the outlook for the second quarter is not very bright.

The global home appliance market is expected to see intensified competition among manufacturers as sluggish demand persists. The TV market is anticipated to experience a significant decline in demand due to factors such as the cancellation of global sporting events. The smartphone market is also expected to see fierce competition among manufacturers as demand drops sharply due to the spread of COVID-19. Furthermore, demand for automotive parts is projected to plummet following the suspension of factory operations by major automakers.

On the other hand, the B2B business is expected to see expanded business opportunities for laptops, monitors, and information displays as non-face-to-face interactions, remote work, and remote education expand due to the impact of COVID-19. An official from LG Electronics stated that the company plans to overcome the crisis in the second quarter through the expansion of sales channels and product lines, the streamlining of resource operations, and improvements to the business structure.