LG Elec beats earnings estimates on healthy automotive biz

LG Electronics Inc., the leading global home appliance maker, reported better-than-expected quarterly earnings thanks to the strong automotive business, its future growth engine, lifting its share price to a three-week high.

The South Korean tech giant said on Tuesday its preliminary operating profit advanced 33.5% to 996.7 billion won ($737.7 million) on a consolidated basis in the third quarter from a year earlier although sales dipped 2.2% to 20.7 trillion won. The profit and revenue were higher than analysts’ average estimates of 808.4 billion won and 20.5 trillion won, respectively.

“Driven by the major business of home appliances as well as vehicle solutions, LG’s future growth engine, the company accelerated the qualitative growth of its business despite the economic slowdown and prolonged decline in demand,” LG said in a statement.

Its shares ended up 7% at 105,100 won after hitting 105,600 won, their highest since Sept. 19, in the South Korean stock market. The main Kospi closed down 0.3%.

AUTOMOTIVE ELECTRONICS BOOSTS

LG’s automotive electronics division continued its rapid growth based on its order backlog expected to rise to 100 trillion won by year-end and a stable supply chain, although the company did not provide earnings details of the business during the quarter, which will be unveiled later this month.

The vehicle component solutions division’s sales are expected to top 10 trillion won this year for the first time, the company said.

The division’s order backlog already reached 80 trillion won as of end-March from 50 trillion won in 2020 as automobiles were equipped with more electronics parts and the rapid growth of the global EV market. The division reported its first profit during the second quarter of 2022 in nearly seven years.

LG is speeding up the establishment of regional production bases in response to growing demand to convert to electric vehicles from major global customers. LG Magna e-Powertrain Co., a joint venture between LG and Canada’s Magna International Inc., has announced plans to build an EV parts factory in Hungary.

LG’s home appliance and air solution division enjoyed significant growth in the business-to-business (B2B) market. The company aims to expand its air conditioning business with heat pumps and energy storage systems (ESS) to meet the growing demand for eco-friendly and high-efficiency products in North America and Europe.

The company’s home entertainment division is accelerating its business transition from a product-based business to a media and entertainment platform, given the sustained growth of the content and service business. The number of TVs powered by webOS, the foundation of the content and service business, is expected to reach 300 million units by 2026.

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

Jongwoo Cheon edited this article.