SEOUL, South Korea - LG Electronics (KRX: 066570) reported consolidated revenue of KRW 20.7 trillion and operating income of KRW 996.7 billion for the third quarter of 2023.
These are the second highest third quarter figures in the company's history.
Gains in the home appliance and vehicle solutions businesses mainly drove the performance.
The Key Points
- B2B sector and revenue split: The company announced that its B2B sector, including automotive parts and HVAC systems, accounted for approximately 35% of total revenue this year. The goal is to increase B2B revenue to over KRW 40 trillion by 2030. The B2B model provides a more stable revenue stream less susceptible to economic fluctuations than B2C.
- Operating income and revenue diversification: Operating income increased more than 30% YoY and QoQ. The increase in profitability is attributed to LG's business model innovation, which integrates non-hardware solutions such as subscription services with traditional hardware products. The model has shifted LG's revenue generation from one-time transactions to recurring revenue streams.
- Investment strategy and expansion: LG plans to expand globally in 2023, focusing on businesses that align well with existing industries and have high growth potential. The company's investment in electric vehicle charging is a case in point.
Financial Highlights by Division
LG Home Appliance & Air Solution: Reported revenue was KRW 7.46 trillion, and operating income was KRW 504.5 billion, more than doubling year-on-year due to operational efficiencies.
LG Vehicle Component Solutions: The division posted revenue of KRW 2.5 trillion and operating income of KRW 134.9 billion. Order backlog is expected to reach KRW 100 trillion by the end of the year.
LG Home Entertainment: Despite higher LCD panel costs, the division reported revenue of KRW 3.57 trillion and operating income of KRW 110.7 billion.
LG Business Solutions: This unit posted revenue of KRW 1.33 trillion and an operating loss of KRW 20.5 billion due to reduced demand for IT products.
What comes next?
For the fourth quarter, LG aims to capitalize on high-growth opportunities in the B2B sector and optimize efficiency through improved demand forecasting.