Q2 earnings announcement: Revenue of 1.1205 trillion won, operating loss of 34 billion won
Recorded lower performance compared to the same period last year; actively responding to new models from strategic North American customers in the third quarter

LG Innotek (CEO Park Jong-seok) recorded second-quarter earnings that declined compared to the same period last year due to decreased demand for smartphone components. However, its new growth engine, the automotive parts business, continued its growth trend.

LG Innotek recorded sales of 1.1205 trillion won and an operating loss of 34 billion won in the second quarter of 2016 under Korean International Financial Reporting Standards (K-IFRS). This represents a 22.6% decrease in sales compared to the same period last year and a 6.2% decrease compared to the previous quarter.

"A company official stated, 'We were impacted by the decline in demand for components due to the global economic downturn and the slowdown in the growth of the premium smartphone market,' adding, 'We are improving our business structure by strengthening the competitiveness of new businesses, such as automotive parts.'"

The company's automotive parts business recorded sales of 200.9 billion won, a 29% increase compared to the same period last year. New orders for automotive parts in the first half of the year amounted to 1.1 trillion won. The market expects LG Innotek to secure an additional 2 trillion won in orders in the second half, bringing the total volume of new orders for the year to 3 trillion won.

LG Innotek plans to actively respond to demand for components for new smartphone models from strategic North American customers and accelerate efforts to secure new customers in Greater China during the third quarter. Along with this, we plan to further strengthen cost competitiveness through productivity innovation.

Substrate materials business declines due to decreased demand for smartphone main boards.
LED business performance also declined due to decreased demand for LEDs for TV backlight units.

The Optical Solutions business recorded sales of 408.2 billion won, down 42% from the same period last year due to decreased demand for smartphone camera modules. This represents an 8% decline compared to the previous quarter. In particular, demand for components for existing models decreased ahead of the launch of new models by major customers in the third quarter.

The substrate materials business recorded sales of 273.5 billion won, down 23% year-on-year due to decreased demand for High Density Interconnect (HDI), which is used as a main board for smartphones. This represents a 15% decrease in sales compared to the previous quarter. Display components, such as tape substrates and photomasks, maintained stable performance.

The automotive parts business recorded sales of 200.9 billion won, a 29% increase compared to the same period last year, driven by expanded global sales of automotive motors and sensors and the mass production of new wireless communication module models. This represents a 7% increase compared to the previous quarter. The proportion of automotive parts in the company's total sales expanded from 11% in the same period last year to 18% this quarter.

The LED business recorded sales of 186.9 billion won, a 5% decrease compared to the same period last year due to reduced demand for LEDs for TV backlight units (BLU), but a 9% increase compared to the previous quarter. Sales for lighting exceeded half at 54%, leading the rebound in LED business sales.