Core LG Strengths
At its result announcements on Oct. 29, LG Electronics posted 14.03 trillion won (US$12.26 billion) in sales and 294 billion won (US$256.88 million) in operating profits in the third quarter. The sales figures decreased about 5 percent from 14.71 trillion won (US$12.86 billion) during the same period a year ago, but slightly increased from 13.93 trillion won (US$12.17 billion) in the previous quarter, as sales of TVs increased in the major markets.
Also, the operating profits figure grew from 244.1 billion won (US$213.28 million) in the second quarter due to the improvement in sales performance of the home appliances sector and in profitability of the TV sectors. However, the figure decreased compared to the previous year.
The LG Home Entertainment (HE) Company, which is in charge of the TV business, recorded sales of 4.29 trillion won (US$3.75 billion) and operating profits of 37 billion won (US$32.33 million). The sales figures increased 9 percent due to solid sales of OLED and Ultra HD TVs in major markets such as North America, Latin America and Russia. However, it slightly decreased from a year ago.
Its operating profits went into the black in three quarters due to the extension of premium products and continuous improvement of production costs.
The LG Mobile Communications (MC) Company posted 3.38 trillion won (US$2.95 billion) in sales and 77.6 billion won (US$67.8 million) in operating losses, turning red. The sales figures dropped compared to both the previous year and quarter due to the decrease in sales in both the emerging market and the Korean market. In the third quarter, the division reported global shipments of 14.9 million smartphones. Among them, 9.7 million units of long term evolution (LTE) smartphones were sold, the largest number in history.
The LG Home Appliance & Air Solution (H&A) Company reported a strong quarter with sales of 4.15 trillion (US$ 3.63 billion) and operating profits of 245.6 billion (US$ 214.59 million). Despite seasonality, the sales figures grew 4.4 percent year-on-year due to strong sales of premium products, including refrigerators and washing machines, in major markets, such as North America and Korea. The operating profit figures increased more than 400 percent from the same period the year before, with the release of differentiated market leading products, including the TROMM Twinwash System Washing machine, and sales growth of split system air conditioners.
The LG Vehicle Components (VC) Company, which is in charge of new business, recorded 478.6 billion won (US$418.73 million) in sales and 800 million won (US$698,995) in operating profits. It reported a 6 percent increase in sales quarter-on-quarter, primarily due to the high growth of its automotive infotainment components business. The expansion of investments in R&D related to electric car components and application components contributed to a modest operating loss.
In the fourth quarter, the demand of premium products, including UHD TVs, is expected to gradually grow in the more competitive TV market. Accordingly, the HE Company will actively seek to boost sales of premium products, such as OLED and UHD TVs, and maintain stable profitability by strengthening production cost competitiveness.