LG Electronics set an all-time high for annual sales for the second straight year, but swung to a quarterly operating loss in the fourth quarter for the first time in nine years. While annual sales kept growing, weaker profitability and expense burdens were concentrated in the fourth-quarter results.
LG Electronics said on a consolidation basis that last year's cumulative sales totaled 89.2025 trillion won, up 1.7% from a year earlier, while operating profit fell 27.5% to 2.478 trillion won, based on preliminary figures. Global demand remained sluggish, but sales grew for a second consecutive year. However, annual profitability deteriorated due to delayed recovery in demand for display products and higher marketing expenses amid intensifying competition. In the second half, nonrecurring expense related to voluntary retirement for workforce restructuring was also reflected.
Weak fourth-quarter performance stood out in particular. LG Electronics' fourth-quarter sales on a consolidation basis came to 23.8538 trillion won, but it posted an operating loss of 109.4 billion won, turning to the red on a quarterly basis. The fourth-quarter loss is the first in nine years since the fourth quarter of 2016. The off-season slowdown in TV and home appliance sales, combined with year-end marketing expense and logistics cost burdens and one-off expense, is seen to have sharply eroded profitability.
By business, B2B operations such as vehicle components and heating, ventilation and air conditioning (HVAC), Non-HW businesses including webOS and maintenance, and D2C businesses centered on appliance subscriptions and online sales expanded their shares. Last year, these so-called "qualitative growth" areas accounted for a share close to half of total sales.
The home appliance business is expected to post record annual sales, driven by stronger sales of premium products and growth in subscription services. LG Electronics plans to increase investment this year in B2B areas such as built-in appliances and component solutions including motors and compressors.
By contrast, display-based businesses such as TV, IT and ID are expected to swing to an annual loss due to increased marketing expense stemming from weak demand and fiercer competition. Even so, the webOS platform business, built on about 260 million devices worldwide, maintained double-digit growth. LG Electronics plans to keep expanding the platform business while securing content.
The vehicle components business is expected to post record highs in both sales and operating profit last year. Profitability is also expected to improve on the trend toward higher-end in-vehicle infotainment and better operational efficiency. LG Electronics plans to sustain growth this year on the back of a large order backlog, while also strengthening capabilities related to AIDV beyond SDV.
The HVAC business is also growing as a pillar of B2B by expanding its portfolio from residential to commercial and industrial. It is expanding maintenance operations and its global production network in parallel, while seeking business opportunities in cooling solutions for AI data centers.
The results announced this time are preliminary under Korea International Financial Reporting Standards (K-IFRS). LG Electronics plans to announce 2025 net income on a consolidation basis and finalized results by business headquarters at an earnings briefing at the end of this month.