LG Electronics Q3 earnings beat expectations

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LG Electronics Q3 earnings beat expectations

Published: 10 Oct. 2023, 14:22 Updated: 10 Oct. 2023, 18:46

JIN EUN-SOO
jin.eunsoo@joongang.co.kr

LG Electronics CEO William Cho speaks at the IAA Mobility 2023 press conference in September. [NEWS1]

LG Electronics reported better-than-expected third-quarter earnings, logging 996.7 billion won ($737.9 million) in operating profit, which is 33.5 percent more than the previous year, according to its preliminary results announced Tuesday.

Expanded business-to-business deals contributed to the earnings surprise.

It is the second-best third-quarter result for LG Electronics after posting 1.1 trillion won of operating profit in 2020.

This year's figure is more than 20 percent above the market consensus of 898.9 billion won compiled by the FnGuide.

The Korean electronics company attributed the positive result to the increased business-to-business transactions in vehicle solutions and ventilation systems, utilizing experiences accumulated through its past businesses, which was mostly concentrated on business-to-consumer transactions.

LG plans to further expand its ventilation system business in North America and Europe responding to growing needs for eco-friendly and energy-efficient ventilation methods.

LG Electronics has been pushing to overhaul its business structure as it vies to find a new growth engine other than home appliances.

Its CEO William Cho early this year said during a press conference it would expand business-to-business deals and fortify non-hardware products. Cho pledged LG Electronics to become a solution provider in regards to smart life.

"LG Electronics being able to post solid revenue and high operating profit means that the company is realizing its plan to advance its business portfolio towards its future vision," said the company in a release.

Its third-quarter revenue came to 20.7 trillion won, 2.2 percent less than the previous year, but was still over the market consensus of 20.4 trillion won.

Revenue was also a second-best third-quarter result for LG Electronics after logging 21.2 trillion won in 2022.

LG Electronics is betting big on its vehicle solutions business.

"Our vehicle solutions business' order backlog is expected to hit 100 trillion won by the end of this year," the company said.

"On the back of stable supply chain management, [vehicle solution business] revenue is expanding and profitability is stabilizing, entering a rapid growth trajectory."

The company expects its sales to surpass 10 trillion won for the first time this year, forming a major pillar of LG Electronics' business portfolio.

LG Electronics' vehicle solutions business which was established 10 years ago turned to profit for the first time last year on the back of growing EV demands. It has also begun mass producing EV chargers in May under the brand HiEV Charger.

LG Electronics shares rose by 7.03 price on Tuesday, closing at 105,100 won per share.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]