LG Twin Tower, Yeouido, Yeongdeungpo-gu, Seoul/Photo = News 1
LG Electronics(147,500 -1.67%)The first ever pandemic (a global pandemic of infectious diseases) crisis in history was turned into an opportunity as the company changed its record-high performance last year.
LG Electronics announced on the 8th that its provisional operating profit on a consolidated basis in the fourth quarter of last year (October-December) rose 535.6% from the same period last year to 647 billion won, the highest in the fourth quarter. During this period, provisional sales rose 16.9% from the previous year to 18,782.6 billion won, the highest quarter ever.
Accordingly, LG Electronics’ total sales last year exceeded 63 trillion 2638 billion won and operating profit exceeded 3 trillion won (3,191.8 billion won) for the first time ever. LG Electronics’ previous record high sales were 62,306 billion won in 2019, and its operating profit was 2.703 trillion won in 2018.
Analysts say that the unprecedented crisis of new coronavirus infection (Corona 19) turned into an opportunity. It is analyzed that LG Electronics broke the jinx of’Sang Go-Ha-Low (first half performance is good and second half performance is poor)’, which has held back its annual performance by increasing online sales of home appliances and TVs as the Corona 19 prolonged. . LG Electronics achieved operating profits of 1.9 trillion won in the first quarter of last year, 495 billion won in the second quarter, and 9590 billion won in the third quarter.
In the announcement of the tentative results that day, the report card for each business division was not disclosed. However, NH Investment & Securities estimated that the home appliance (H&A division), which led LG Electronics’ earnings in the fourth quarter of last year, recorded operating profits in the early half of 400 billion won, and the TV (HE division) in the early to mid-range 200 billion won.
This means that operating profit jumped more than three times and more than two times compared to the previous year. Sales of stylers (clothing managers), dryers, dishwashers, etc., which are called new home appliances, along with sales growth of LG OLED TVs, led the performance.
It is estimated that the operating loss of auto parts (VS division) and smartphone (MC division) continued to be around 60 billion won in the early to mid-200 billion won. However, it was analyzed that the MC division’s losses decreased slightly compared to the previous year due to the expansion of sales of low-end products in North America and Central and South America, and the VS division’s losses from the previous year were due to the recovery of the European and North American automobile markets.
In addition, LG Innotek, which supplies camera modules to Apple, recorded the highest record of 300 billion won in the early and mid-range of 300 billion won thanks to strong sales of’iPhone 12′, while the BS business headquarters in charge of LG Electronics’ business-to-business (B2B) business is 50 billion won. It is estimated that it has generated operating profits both inside and outside the unit.
The stock market predicts that LG Electronics’ performance this year, which achieved good results last year despite the aftermath of Corona 19, will be better than this. Excluding the earnings of LG Innotek, which generated an operating profit of 500 billion won last year, it is predicted that from this year, LG Electronics’ net operating profit alone will exceed 3 trillion won per year.
This year, the progress of the VS business division, which is being nurtured as a future business, is especially noteworthy. Securities are predicting that the VS business division will succeed in turning profitable for the first time in the third quarter of this year, and will emerge as another core business following home appliances and TVs. The reduction in operating loss at the MC division is also expected to be positive for this year’s earnings.
Roh Gyeong-tak, a researcher at Eugene Investment & Securities, said, “LG Electronics is steadfast in demand for premium home appliances and TVs due to the change in new life trends and polarization of consumption due to COVID-19 this year, the increase in the supply of electronic parts due to the full-fledged electric vehicle project, the increase in the proportion of smartphone ODMs, and the relocation of factories. The company said, “We expect the highest performance in history on the back of improved cost structure.”
Seongsu Bae, reporter Hankyung.com [email protected]