LG Electronics beat market expectations in the third quarter of this year (July–September), posting solid results in its core home appliance business despite a tariff headwind from the United States. The vehicle component business, cited as a future growth engine, also played a strong supporting role by delivering record-high revenue. In contrast, the TV business, under pressure from Chinese corporations, failed to rebound and continued to post losses. LG Electronics plans to further strengthen its business-to-business (B2B) operations and target the mid- to low-priced appliance market to improve companywide profitability.
LG Electronics disclosed on the 31st that, on a consolidation basis, its third-quarter operating profit was 688.9 billion won, a 8.4% decline from a year earlier, according to a preliminary tally. The figure is about 14% above the market consensus. Revenue was 21.8737 trillion won, down 1.4% from a year earlier. Compared with the previous quarter, operating profit rose 7.7% and revenue increased 5.5%.
The outperformance was driven by LG Electronics' cash cow home appliances and its new growth engine, the vehicle component business. In particular, home appliances faced higher costs due to the U.S. government's 50% tariff on steel derivatives, but offset the headwinds through production base optimization and a "two-track (premium·volume zone)" strategy. The vehicle component business also performed well on the back of strong infotainment operations despite concerns over a slowdown (chasm) in electric vehicle demand.
◇ Vehicle components "record high," TVs "losses continue"… Mixed report card
By business division in the third quarter, the home appliance (HS) division recorded revenue of 6.5804 trillion won and operating profit of 365.9 billion won. Revenue and operating profit rose 4.7% and 3.2%, respectively, from a year earlier. The "two-track strategy" targeting both premium and volume zones, along with expansion of subscription and online businesses, contributed to growth. In particular, efforts to optimize production locations and improve efficiency largely offset the tariff impact.
The vehicle component (VS) division posted third-quarter revenue of 2.6467 trillion won and operating profit of 149.6 billion won. Quarterly revenue was the highest for a third quarter, and operating profit hit an all-time high. It was the first time the division's quarterly operating margin topped 5%. The results are attributed to strong in-vehicle infotainment (IVI) operations and improved operating efficiency.
The MS division, which oversees the TV business, reported third-quarter revenue of 4.6525 trillion won and an operating loss of 302.6 billion won. Revenue fell 9.5% from a year earlier. The loss widened as increased marketing expense due to intensifying competition and one-off costs from voluntary retirement for workforce renewal were reflected.
The heating, ventilation, and air conditioning (ES) division posted third-quarter revenue of 2.1672 trillion won and operating profit of 132.9 billion won. Revenue rose 1.1% on expanded sales in the domestic market and growth in subscription and online businesses, but operating profit edged down due to increased investment for future growth.
◇ In the fourth quarter, targeting new businesses such as AI data centers
LG Electronics expects delayed recovery in global demand and intensifying competition to continue into the fourth quarter, and it plans to maintain growth centered on qualitative areas.
In home appliances, the company will continue to expand subscription and online businesses and push to improve its cost structure. For vehicle components, it plans to secure stable profitability by responding to external changes such as the U.S. electric vehicle subsidies policy and improving the product mix and cost structure.
For the TV business, the company will expand the base of the webOS platform business along with operational efficiency and step up efforts to target the Global South, including India, where demand is relatively solid.
In heating, ventilation, and air conditioning, the company will seek business opportunities led by commercial HVAC systems and industrial and power-generation chillers. In particular, it plans to accelerate the commercialization of next-generation liquid-cooling solutions, building on orders for AI data center cooling solutions.