LG Electronics performed well in the second quarter of 2023, breaking its all-time record for revenue despite the economic downturn. Its operating profit surpassed that of Samsung Electronics for the second consecutive quarter.

LG Electronics disclosed its business results for the second quarter of 2023 on the 27th. Based on consolidated financial statements, revenue was 19.9984 trillion won, a 2.7% increase compared to the same period last year. Operating profit was 741.9 billion won, a 6.3% decrease year-on-year, and net profit was 195.3 billion won, a 42.2% decrease year-on-year.

Despite the delayed recovery in demand due to the global economic slowdown and intensified competition, sales in the second quarter recorded the highest figure ever for a second quarter, driven by the continued expansion of the proportion of business-to-business (B2B) transactions, such as automotive electronics and HVAC, in terms of business structure.

Operating profit fell by approximately 6.2% compared to the same period last year due to non-recurring factors related to the virtuous cycle of the personnel structure, such as voluntary retirement conducted at the beginning of the year, and one-time costs, such as the increase in material costs for the recall of General Motors (GM)’s Chevrolet Bolt EV. However, despite the impact of these one-time costs, the effect on profitability was minimized through the growth of platform-based businesses, such as content and services, and efforts to improve business structure led by the company-wide War Room Task.

In particular, it surpassed Samsung Electronics, which recorded an operating profit of 668.5 billion won in the second quarter, for the second consecutive quarter following the first quarter.

LG Electronics plans to strengthen its product competitiveness in the market by capturing customer needs early based on more sophisticated demand forecasting in the third quarter. The company also intends to focus on securing a stable profit structure while continuing efforts to maximize business efficiency, such as reinforcing its direct-to-consumer (D2C) strategy led by its online brand shop (LGE.COM).

If we look at the performance by business division

The H&A (Home Appliance & Air Solution) Business Division recorded sales of 7.9855 trillion won and an operating profit of 600.1 billion won in the second quarter. Despite slowing market demand and intensifying competition among companies, the B2B air conditioning business continued to grow, driven by solid fundamentals and high efficiency and eco-friendliness. In particular, operating profit increased by nearly 40% compared to the same period last year. Proactive efforts to stabilize the cost structure, including raw material and logistics costs, also contributed to achieving high profitability.

The HE (Home Entertainment) business division recorded sales of 3.1467 trillion won and an operating profit of 123.6 billion won in the second quarter.

In response to the slowdown in demand in key markets caused by geopolitical issues in Europe, the company continued its strategy of efficient business operations. Although sales decreased slightly compared to the same period last year, operating profit increased significantly due to the efficiency of marketing expenditures and the diversification of the revenue structure driven by the growth of highly profitable platform-based content and service businesses.

The Vehicle Component Solutions (VS) business division recorded sales of 2.6645 trillion won and an operating profit of 89.8 billion won in the second quarter, achieving the highest figures ever for both sales and operating profit for a second quarter and maintaining a trend of sustained growth.

On the other hand, the company recorded an operating loss of 61.2 billion won in the second quarter, as it reflected 151 billion won in one-time costs related to increased vehicle parts material costs during the process of conducting the recall of GM’s Chevrolet Bolt EV in 2021.

The Business Solutions (BS) division recorded sales of 1.3327 trillion won and an operating profit of 2.6 billion won in the second quarter. Both sales and operating profit decreased slightly compared to the same period last year due to the prolonged decline in demand for IT products.