LG Electronics recorded an operating profit of 639.4 billion won in the second quarter, nearly half of last year's figure, due to the demand slump caused by tariffs, the decline in TV demand, and exchange rate impacts. LG Electronics plans to enhance its business structure by focusing on its business-to-business (B2B) sectors, such as automotive and heating and cooling, aiming for improved performance in the second half. However, there are concerns that uncertainty regarding tariffs is increasing amid stalled negotiations with the U.S. government, which may complicate performance improvements in the latter half of the year.
On the 25th, LG Electronics announced that it recorded consolidated revenue of 20.7352 trillion won and an operating profit of 639.4 billion won for the second quarter. Compared to the same period last year, revenue decreased by 4.4% and operating profit by 46.6%. A representative of LG Electronics noted, "The overall revenue and operating profit declined due to continued unfavorable business conditions such as weak demand in major markets, tariff burdens stemming from changes in U.S. trade policies, and intensified market competition," adding that the company was also affected by rising expenses like logistics costs compared to the previous year.
By business segment, household appliances (Home Appliance Division), automotive (Vehicle Solutions Division), and heating and cooling (Energy Solutions Division) saw both revenue and operating profit increase compared to the same period last year. These three divisions recorded their highest revenue and operating profit for the second quarter, with the automotive business particularly showing record-high revenue and operating profit across all quarters. The media and entertainment (Media Solutions Division) sector, however, turned to a loss due to declining TV sales and increased marketing expenses to counteract this downturn.
A representative of LG Electronics remarked, "We are focusing more on 'qualitative growth' areas such as B2B, subscriptions, and software fields like webOS as we enhance our business structure," adding, "These areas represent fields where we are concentrating our capabilities from a portfolio transformation perspective."
The Home Appliance Division recorded revenue of 6.5944 trillion won and operating profit of 439.9 billion won in the second quarter. Despite lower appliance demand and the burden of tariffs and maritime freight, it achieved its highest performance for the second quarter. LG Electronics explained that "the rapid growth of subscription businesses, which combine products and services, continues to be a trend," noting that efforts such as production site optimization and improvements in cost competitiveness in response to rising costs, including tariffs and logistics fees, contributed to securing profitability.
However, the second half is expected to face continued delays in appliance demand recovery and heightened competition. LG Electronics plans to continue its growth by strengthening its subscription business and expanding its direct-to-consumer (D2C) business using online channels. Efforts to enhance cost competitiveness as a response to U.S. tariffs will also be pursued to secure profitability.
The Media Solutions Division turned to a loss in the second quarter, recording revenue of 4.3934 trillion won and an operating loss of 191.7 billion won. Decreased market demand led to a decline in TV sales, and measures such as price cuts and increased marketing expenses to counteract intensified competition affected profitability.
The automotive business recorded revenue of 2.8494 trillion won and operating profit of 126.2 billion won in the second quarter. Both revenue and operating profit reached their highest figures across all quarters. In terms of profitability, an improvement in the product mix, increasing the share of premium products in the in-vehicle infotainment (IVI) business, significantly boosted operating profit. LG Electronics also reported that optimizing operations in electric vehicle parts and lamp businesses contributed to improving profitability.
The heating and cooling business achieved revenue of 2.6442 trillion won and operating profit of 250.5 billion won in the second quarter. It reached a record performance for the second quarter. Sales increased in response to rising demand for home air conditioners in the domestic market, while new business opportunities were discovered in commercial, industrial, and power generation sectors, contributing to revenue growth. In terms of profitability, operating profit also increased compared to the same period last year due to the operating leverage effect from revenue growth.
Meanwhile, concerns about uncertainty regarding the U.S. government's tariff policies are deepening. The Donald Trump administration announced that it would suspend reciprocal tariffs until August 1, leaving room for negotiation with various countries. However, unlike Japan, which confirmed its tariff rate on the 22nd (local time), our government has yet to see progress in negotiations.
Park Young-woo, a researcher at SK Securities, stated, "The burden of reciprocal tariffs added to the general tariffs is becoming more severe, noting that although performance declined in the second quarter due to inventory stockpiling by clients in anticipation of tariffs, there are greater worries about the impact of the tariffs in the latter half of the year."