LG Electronics posted its highest second-quarter results ever this year on the back of balanced growth across its home appliances, TV, vehicle components, and heating, ventilation and air conditioning (HVAC) businesses. Recurring-revenue businesses such as business-to-business (B2B) and subscriptions also continued to grow.
LG Electronics announced on the 30th that, on a consolidation basis, it recorded sales of 23.8265 trillion won and operating profit of 1.5791 trillion won in the second quarter. Compared with a year earlier, sales rose 14.9% and operating profit jumped 147%. Both sales and operating profit were the highest for any second quarter.
Compared with the previous quarter, sales increased 0.4% but operating profit fell 5.7%. Pre-tax profit (profit before income tax from continuing operations) in the second quarter was 1.2394 trillion won, up 62.8% from a year earlier. Net profit was 781.3 billion won, up 28.1%.
Cumulative first-half sales were 47.5537 trillion won, with operating profit of 3.2528 trillion won. First-half operating profit surpassed last year's full-year operating profit of 2.4784 trillion won. LG Electronics said that despite an unfavorable external environment, including the Middle East war, sales increased as home appliance sales grew, TV demand rose due to sporting events, and the vehicle components business continued to expand.
Operating profit was affected by higher sales, a greater mix of high value-added products, and improvements in the cost structure. Refunds of tariff paid on U.S.-bound shipments last year were also reflected as a one-off revenue.
LG Electronics' second-quarter B2B sales were 6.5 trillion won, up 5% from a year earlier. Excluding LG Innotek, B2B accounted for 36% of LG Electronics' sales. Subscription business sales, including products and services, were 660 billion won, up 5% in the same period. LG Electronics is also expanding the overseas rollout of its subscription business.
◇ Home appliance sales top 7 trillion won for the first time… TV business in the black
The Home Appliance & Air Solution (HS) division, which oversees the home appliance business, posted second-quarter sales of 7.0757 trillion won and operating profit of 685.9 billion won. It was the first time quarterly sales topped 7 trillion won. The operating margin was about 9.7%. A two-track strategy targeting both premium products and volume-zone products, along with cost structure and supply chain optimization and tariff refund effects, contributed to improved profitability.
The subscription business, which continues to generate service sales after product purchases, also contributed to a stable revenue structure. LG Electronics expects short-term stagnation in appliance demand in the third quarter but plans to expand sales centered on the Global South market, where demand is relatively solid.
The HS division plans to continue strengthening fundamentals, including improving the cost structure, to secure profitability, while also ramping up the actuator business for robots.
The Media & Entertainment Solution (MS) division, which oversees the TV business, recorded sales of 5.1146 trillion won and operating profit of 219.4 billion won. The operating margin was about 4.3%. Sales of premium products such as organic light-emitting diode (OLED) TVs and QNED, a premium liquid crystal display (LCD) TV, increased. The high-margin webOS platform business also grew, supporting the return to the black.
webOS is a platform that underpins a business model that can generate additional revenue through advertising and content even after TVs are sold. In the third quarter, LG Electronics plans to increase the share of premium product sales and scale up the webOS business while improving the cost structure and operational efficiency.
The Vehicle component Solutions (VS) division posted second-quarter sales of 3.0259 trillion won and operating profit of 191.2 billion won. Both sales and operating profit were record highs for a second quarter. The operating margin was about 6.3%, exceeding 6% for a second straight quarter.
Quarterly sales at the VS division surpassed 3 trillion won for a second straight quarter. An LG Electronics official said, "The vehicle components business has established itself as a stable B2B-based cash generator." LG Electronics expects sales growth to continue in the third quarter, backed by its existing order backlog. It also plans to maintain profitability by increasing the share of high-profit products and improving operational efficiency.
◇ HVAC operating margin 8.6%… AIDC cooling business expands
The Eco Solution (ES) division, which handles the HVAC business, recorded sales of 2.7261 trillion won and operating profit of 235.8 billion won. As overseas air conditioner sales increased, sales grew, and the operating margin came in at 8.6%.
In the third quarter, LG Electronics will continue to drive overseas growth of its HVAC business by leading with eco-friendly, high-efficiency products and solutions tailored to regional climates and environments.
The company will also continue investing to nurture the artificial intelligence data center (AIDC) cooling solutions business. The company said, "Our independently developed cooling distribution unit (CDU) is quickly making business gains, including being on the verge of entering global AIDC core supply chains thanks to its outstanding performance."
LG Electronics recently completed NVIDIA's certification process for its AIDC CDU. Based on this, whether it secures actual orders and the timing of deliveries are expected to determine when the AIDC cooling solutions business will start contributing to results.