LG Electronics Misses Profit Estimates Despite Strong B2B Growth
(MENAFN) LG Electronics reported lower-than-expected profits for the first quarter of the year, despite strong performances in its business-to-business (B2B) sectors, particularly in vehicle components and air conditioning, the company announced Thursday.
In the January-March period, consolidated revenue grew by 7.8% year-on-year, reaching 22.74 trillion won ($15.8 billion), marking the highest first-quarter revenue in the company’s history.
However, operating profit dropped by 5.7% to 1.26 trillion won ($876.9 million), and while net income surged 49.6% to 875.6 billion won ($609.4 million), the profit still fell short of market expectations, which were around 1.33 trillion won ($925.7 million).
The vehicle solution unit, which manufactures components for automobiles, saw its highest-ever quarterly revenue and operating profit, with 2.84 trillion won ($2 billion) in revenue and 125.1 billion won ($87 million) in profit. This success was driven by a strong order backlog and improved profitability in its in-vehicle infotainment business.
The eco solution division, responsible for heating, ventilation, and air conditioning (HVAC) products, also achieved record-high quarterly revenue and profit, with revenue reaching 3.05 trillion won ($2.1 billion) and profit totaling 406.7 billion won ($283.1 million). Both the vehicle solution and eco solution divisions were crucial drivers of LG’s B2B growth.
LG's flagship home appliance segment achieved an operating profit of 644.6 billion won ($448.6 million) and set a new revenue record of 6.7 trillion won ($4.7 billion). The growth was attributed to an expansion in direct-to-consumer sales and a burgeoning subscription-based business model.
Meanwhile, the media entertainment unit, which produces TVs, saw a modest operating profit of 4.9 billion won ($3.4 million) on revenue of 4.95 trillion won ($3.5 billion). Weak demand for TVs was counterbalanced by growth in webOS-based advertising and content services.
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