LG Innotek saw a sharp year-over-year jump in third-quarter operating profit as camera module shipments increased on the back of the launch of Apple's new iPhone. As the specifications of the camera modules installed in the new iPhone rose, unit prices climbed, improving profitability. With manufacturing complexity also increasing, the company is said to have pulled well ahead in market share competition with Chinese corporations.
On the 30th, LG Innotek announced in a filing that third-quarter revenue came to 5.3694 trillion won and operating profit to 203.7 billion won. Compared with a year earlier, revenue fell 5.6%, while operating profit rose 56.2%. It beat the operating profit consensus of the securities industry (177.6 billion won) by about 15%.
An LG Innotek official said, "In addition to a favorable exchange rate, the results of efforts to improve profitability by business unit, including optics and vehicle components, became visible, leading to a sharp year-over-year increase in operating profit," adding, "The fourth quarter is the peak season for supplying new mobile models, and we expect the sales growth of communication semiconductor substrates, including camera modules, to continue."
By business, the Optical Solutions division, which handles the camera module business, recorded revenue of 4.4812 trillion won, down 7.4% from a year earlier. It rose 46.8% from the previous quarter. As mass production of new mobile models began in earnest, supplies of high value-added mobile camera modules increased gradually.
The Substrate and Materials business posted revenue of 437.7 billion won, up 18.2% from a year earlier. It was a 5.2% increase from the previous quarter. With mass production of new mobile models ramping up, supply of semiconductor substrates expanded, boosting revenue.
The Vehicle Components business recorded revenue of 450.6 billion won, down 5.7% from a year earlier and 3.3% from the previous quarter. Revenue slipped slightly due to weak demand in downstream industries, but sales growth of high value-added products such as automotive lighting modules continues. LG Innotek said its order backlog has also been trending upward for five consecutive years. As of the third quarter, the order backlog totaled 17.8 trillion won. The Vehicle Components business plans to accelerate profitability improvement through expanding the sales share of high value-added parts such as in-vehicle communications and lighting, optimizing its global production system, and cost-competitiveness initiatives such as process innovation.
Chief Financial Officer Park Ji-hwan of LG Innotek said, "Based on capacity expansions at our new plants in Vietnam and Mexico, we will accelerate strategic operations of global production sites, while rapidly enhancing cost competitiveness by expanding the introduction of AX (AI transformation) and internalizing core components."