LG Electronics recorded an operating profit of over 3 trillion won for the first time in history due to demand for pent-ups and zip-cocks from Corona 19 last year. Sales exceeded 63 trillion won, and both operating profit and sales achieved the highest performance ever.
On the 29th, LG Electronics announced on the 29th that it achieved a record-high performance last year with consolidated sales of 63,262 trillion won, operating profit of 3,195 billion won, and an operating margin of 5.1%. Operating profit was up 31.1% year-on-year.
The H&A division, which led the company’s highest performance, achieved record-breaking performances, such as annual sales (22,269.1 billion won) and operating profit (2.3526 billion won). The annual operating margin (10.6%) also recorded double digits for the first time. Sales continued to rise for 5 consecutive years and operating profit for 6 consecutive years.
The electrical equipment business suffered from the shutdown of automakers in North America and Europe early last year. With the normalization of operations in the second half of the year, demand for auto parts turned to a recovery trend, and sales of new projects increased, and the VS division recorded the highest annual sales (5,81.5 billion won).
■ The fourth quarter of last year, the highest sales and operating profit in the fourth quarter
In the fourth quarter of last year, company-wide sales and operating profit were 18,780.8 billion won and 655.2 billion won, respectively, up 16.9% and 538.7% compared to the same period last year. The operating margin is 3.5%. Sales, operating profit, and operating margin are all the highest in the fourth quarter.
In particular, the H&A division achieved sales of KRW 5,540.2 billion and operating profit of KRW 299.6 billion. Both sales and operating profit were the highest in the fourth quarter.
Sales at home and abroad showed double-digit growth compared to the same period last year, respectively. Operating profit increased by 145.2% year-on-year thanks to an even increase in sales across all regions of the world, and improved profitability through cost structure improvement.
The HE business division recorded sales of 4,283 billion won and operating profit of 24.5 billion won. Sales in major markets such as North America and Europe increased, and sales recovered to around 4 trillion won in eight quarters. Operating profit increased by 102.5% compared to the same period last year.
The MC business division generated sales of 1.385 trillion won and operating loss of 248 billion won. Sales of premium smartphones declined and the supply of chipsets for 4G smartphones was not smooth, which affected sales and profits.
The VS business division recorded sales of KRW 1.91 trillion and operating loss of KRW 2 billion. Quarterly sales are the second highest after the H&A and HE headquarters, following the previous quarter. Sales in the fourth quarter increased 41.3% compared to the same period last year.
BS Business Headquarters achieved sales of KRW 1.58.5 trillion and operating profit of KRW 73.7 billion. IT products, such as laptops and monitors, contributed to sales growth as demand continued through telecommuting and online education. Operating profit decreased slightly compared to the same period last year due to higher prices for major parts and higher logistics costs.
■ “Reviewing the direction of MC business operation”…a forecast of close to 4 trillion won in operating profit this year
LG Electronics is looking forward to a market recovery and economic revitalization as the corona19 vaccination begins this year and treatments are developed.
On the other hand, low-growth risks exist, such as global uncertainties persisting due to fluctuations in exchange rates, price fluctuations of raw materials and parts, and rising logistics costs, and the real economy’s recovery is slowing.
Stock prices predict that LG Electronics’ sales this year will exceed 68 trillion won and operating profit will reach 4 trillion won.
LG Electronics plans to apply core technologies such as artificial intelligence, 5G, Internet of Things (IoT), and mobility to all business areas this year. In particular, it plans to expand sales of premium products such as sanitary appliances, space appliances, and OLED TVs, and actively respond to product demand caused by non-face-to-face trends.
The H&A division plans to maintain sales growth in timely response to changes in the market and secure profitability through cost structure improvement and resource optimization.
The HE business division expands sales by focusing on premium products such as OLED TVs, nano cell TVs, and ultra-large TVs to increase sales and maintain profitability.
The VS Business Headquarters is securing the basis for profit generation to turn to the black this year. In addition, in order to increase business competitiveness, the company plans to strengthen its vehicle software capabilities and stabilize’LG Magna E-Powertrain’ (tentative name), a joint venture for electric vehicle parts, early.
The BS Business Division plans to expand sales and improve profitability with competitive products. The IT business actively responds to increased demand due to continuous non-face-to-face trends.
LG Electronics believes that it is time to make the best choice by calmly judging the current and future competitiveness of the MC division’s mobile business. Currently, all possibilities are open and the direction of business operation is being carefully reviewed.
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Daeshin Securities Researcher Park Kang-ho said, “LG Electronics promotes the electronics business, a new growth of LG Group, focusing on parts, and if the restructuring of the MC business proceeds, the operating deficit decreases in 2020, expanding the competitiveness of existing businesses and securing new growth after 2021. We believe it will serve as the basis for R&D support and additional M&A acquisitions.”
It is estimated that last year’s strategic alliance with Magna, Canada, and acquisition of ZKW (2018) to secure global automobile customers, thereby enhancing competitiveness in the electronic parts market. It is expected to lead to the expansion of the former enterprise value.”