LG Uplus reported weak performance in the fourth quarter due to a one-time increase in labor costs and the transition of its subsidiary, LG HelloVision, to a loss.
LG Uplus announced on the 6th that it recorded an operating profit of 142.2 billion won in the fourth quarter based on consolidated financial statements for 2024, a decrease of 27.3% compared to the previous year. Revenue was 3.7532 trillion won, down 1.8% compared to the previous year.
LG Uplus explained that the decline in operating profit was impacted by the amortization costs of intangible assets due to the establishment of a new integrated IT system and the increase in one-time labor costs in the fourth quarter following a ruling expanding the normal wage range.
The transition of its subsidiary LG HelloVision to a loss also had an effect. In the fourth quarter, LG HelloVision recorded an operating loss of 1.332 billion won and a net loss of 115.09 billion won. An official from LG HelloVision noted, "The operating profit turned to a loss in the fourth quarter due to increased transmission fees and content costs, as well as the deteriorating conditions in the cable TV and budget mobile phone markets."
Looking at the annual results, LG Uplus's operating profit decreased. The company's annual operating profit for 2024 was 863.1 billion won, down 13.5% from the previous year. Last year's revenue was 14.6252 trillion won, an increase of 1.8% from the previous year, but operating profit actually decreased. In 2023, LG Uplus's operating profit margin was 8.6%, but it fell to 7.3% in 2024, a decline of 1.3 percentage points. This decrease in operating profit margin is related to the increase in marketing expenses last year. Last year, LG Uplus's marketing expenses were 2.2091 trillion won, up 2.1% compared to the previous year.
The slight increase in LG Uplus's revenue can be attributed to an increase in Internet Protocol Television (IPTV) subscriptions, as well as growth in revenue from the Internet Data Center (IDC), solutions, and corporate lines within the corporate infrastructure sector. Last year, IPTV subscriptions reached 5.576 million, up 2.4% from the previous year, while revenue from the corporate infrastructure sector recorded 1.7055 trillion won, an increase of 1.3% compared to the previous year.
Meanwhile, LG Uplus plans to accelerate its business restructuring, focusing on high-profit businesses such as its new growth driver, artificial intelligence (AI) ventures. The strategy is to apply AI models to various business-to-business (B2B) ventures to enhance the universality of AI application services while optimizing tailored strategies for each customer's business environment to accelerate growth in the corporate infrastructure sector.
Yeom Myung-hee, Chief Financial Officer (CFO) and Chief Risk Officer (CRO) of LG Uplus, said, "This year, we will focus on achieving practical outcomes from the AX business and restructuring through selective concentration of existing businesses," adding, "We will do our best to achieve the 2025 management guidance of more than 2% growth in consolidated service revenue (revenue excluding device sales) while providing corporate value and shareholder returns."