LG Electronics posts record 2023 sales, Q4 profit misses forecasts

LG Electronics Inc. on Monday posted record-high 2023 revenue thanks to robust sales of home appliances and vehicle components, although its fourth-quarter operating profit fell short of market expectations.

The South Korean electronics maker said in a regulatory filing that its consolidated sales reached 84.28 trillion won ($64 billion) last year, up 1% from 83.47 trillion won a year earlier.

With that figure, LG posted record annual sales for the third consecutive year.

Of the total, 30 trillion won came from the home appliance business. Its vehicle component solutions business, LG’s new growth driver, contributed 10 trillion won in sales.

Annual operating profit slipped 0.1% to 3.55 trillion won.

The results are preliminary and finalized figures will be available later this month.

“These figures demonstrate LG’s resilient business performance despite challenges posed by a delayed demand recovery amid a global economic slowdown as well as heightened market competition,” the company said in a statement.

Q4 PROFIT SOARED BUT MISSED MARKET EXPECTATIONS

In the fourth quarter of last year, LG saw its preliminary operating profit more than quadruple to 312.5 billion won on a consolidated basis from 69.3 billion won in the year-earlier period.

The decent quarterly earnings growth, however, came in far below the market consensus of 639.5 billion won as consumer demand worldwide cooled rapidly amid persistent concerns about consumer price inflation.

Fourth-quarter sales rose 5.9% to an estimated 23.16 trillion won from 21.86 trillion won a year earlier.

While LG didn’t break down affiliate figures, some brokerages said LG Electronics likely swung to an operating loss in the fourth quarter if gains from LG Innotek Co. were excluded.

SHARES RISE AS INVESTORS LOOK TO LG’S GROWTH POTENTIAL

Shares of LG Electronics finished up 2.1% at 99,100 won on Monday, outperforming the broader benchmark index’s 0.4% fall as investors looked to the company’s growth potential in its vehicle components business.

Analysts said they expect LG’s overall operating profit to improve in the current quarter on seasonal demand and reduced marketing costs.

In the fourth quarter, LG’s automotive parts division likely posted an operating profit of between 70 billion won and 80 billion won, analysts said.

The division’s order backlog is estimated at 100 trillion won as of the end of 2023, they said.

While unveiling LG Electronics’ Vision 2030 last year, Chief Executive Cho Joo-wan said he aims to raise the company’s vehicle component solutions business sales to 22 trillion won, accounting for 20% of the company’s entire sales, by 2030.

LG Magna e-Powertrain Co., an electric vehicle parts joint venture between LG Electronics and Canada’s Magna International Inc. began mass production at its plant in Mexico last year.

The JV also plans to build a production plant in Hungary in 2025, which LG said will function as its European base.

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

In-Soo Nam edited this article.