LG Elec’s automotive business logs record quarterly profit

LG Electronics Inc., the leading global home appliance maker, said its automotive division enjoyed all-time high quarterly profit in the most recent quarter, indicating the company’s future growth engine is gathering pace to grow to a core business.

The South Korean tech giant on Friday said the vehicle solutions division’s operating profit soared 40.4% to 134.9 billion won ($99.5 million) in the July-October period, a quarterly record, from a year earlier as sales grew 6.7% to 2.5 trillion won.

“The automotive electronics business is expected to set the stage to become a key driving force in LG’s overall growth with annual sales predicted to top 10 trillion won this year for the first time,” LG Electronics said in a statement, reaffirming its order backlog is forecast to reach 100 trillion won by year-end. The unit reported total revenue of 7.6 trillion won in the first three quarters.

“The division is likely to maintain strong growth momentum on the accelerating transition to electric vehicles and soaring demand for high added-value parts despite some concerns over a temporary demand slowdown in the automotive parts industry.”

LG Electronics plans to focus on premium products and speed up the establishment of global manufacturing bases for demand from major automakers across the world. It is scheduled to start operations of a plant in Ramos Arizpe, Mexico of LG Magna e-Powertrain Co., its joint venture with Canada’s Magna International Inc., later this year.

The joint venture also announced plans to build an EV parts factory in Hungary.

LG ELECTRONICS POSTS STRONG Q3 PROFIT

LG Electronics said its overall operating profit and sales for the third quarter were in line with preliminary earnings released earlier this month.

The company said the profit advanced 33.5% to 996.7 billion won on a consolidated basis in the third quarter from a year earlier although sales dipped 2.2% to 20.7 trillion won.

Its home appliance and air solution division reported an operating profit of 504.5 billion won, more than double from a year earlier on strong growth in the business-to-business (B2B) market.

The home entertainment division turned to the black with a profit of 110.7 billion won compared with a 55.4 billion won loss a year earlier.

The business cut marketing costs amid higher liquid-crystal display (LCD) prices and diversified profit sources based on growth in the content and services business built on its smart TV platform.

LG Electronics plans to accelerate its business portfolio transition with a focus on B2B and non-hardware sectors in the fourth quarter while continuing its investment in the EV charging business, another new growth engine.

Write to Jeong-Soo Hwang at hjs@hankyung.com
 

Jongwoo Cheon edited this article.