LG Elec’s home appliance unit hits record-high profit in Q1

The home appliance division of LG Electronics Inc. posted its largest ever quarterly profit in the January-March period, exceeding the 1 trillion won ($7.5 billion) mark for the first time, the company said on Thursday.

Household appliances made up two-thirds of the South Korean company’s total first quarter operating profit of 1.5 trillion won, which declined 23% from a year earlier, but still came in better than expected.

Energy-efficient and eco-friendly consumer goods such as air source heat pumps and energy storage systems led its higher earnings in line with tightening climate change regulations.

The Home Appliance & Air Solution (H&A) division raked in 8.02 trillion won in first-quarter sales, which marked the division’s largest ever first-quarter revenue.

The figure represents less than half LG’s entire first-quarter sales of 20.4 trillion won, down 3.3% on-year, on a consolidated basis.

Its strong quarterly results are expected to help LG achieve the home appliance division’s annual sales target of 30 trillion won.

The sales goal is steady from the previous year’s revenue, which analysts see as challenging to attain in light of the economic slowdown, however.

As an eco-friendly and energy-efficient product, LG has launched the air source heat pump Therma V to target European and other advanced markets. The pump doesn’t rely on fossil fuels to generate heat and can replace gas boilers.

Earlier this month, H&A division head Ryu Jae-cheol said its heat product sales would likely more than double in 2023 from last year.

AUTOMOTIVE ELECTRONICS

LG is also betting big on the automotive electronics business, riding on the electric vehicle market boom.

The vehicle component solutions (VS) division swung to a profit for the first time in seven years with an operating profit of 54 billion won. Its sales spiked 27% on-year to 2.4 trillion won.

The home entertainment, or TV division, turned to the black in one year, logging 200.3 billion won in operating profit.

For the current quarter, LG is expected to report solid earnings thanks to growing demand for air conditioners ahead of the summer season and automotive electronics for EVs.

LG’s rental subscription services for air purifiers and bidets are also behind its steady stream of profits.

Last month, LG Electronics announced an ambitious spending plan to widen the technology gap with its rivals such as Whirlpool Corp.

In 2023, it has earmarked more than 5 trillion won for capital expenditures in what would be its biggest capex spending in 10 years. That is 28% more than its 2022 investment.

Write to Ye-Rin Choi at rambutan@hankyung.com

Yeonhee Kim edited this article.