LG Electronics surpasses 60 trillion won in sales for 1st time

LG Electronics surpasses 60 trillion won in sales for 1st time. January. 09, 2018 09:11. by Dong-Il Seo dong@donga.com.

LG Electronics has reached a new height in its sales record. On Monday, LG Electronics announced that the company yielded 61.40 trillion won in sales and 2.47 trillion won in operating profits (provisional data) in 2017. This is the first time that the South Korean electronics giant has exceeded the mark of 60 trillion won in annual sales. LG’s sales for the fourth quarter of last year stood at 16.97 trillion won, which is the highest on a quarterly basis.

The six-trillion won surge year-on-year in sales was mainly attributable to the contributions by the Home Entertainment (HE) headquarters in charge of TV business. Specific figures from different sections of business are unavailable for now as the data are provisional, but industry experts and stockbrokers expect that the HE headquarters made contributions worth roughly 5.58 trillion won in sales and 418.9 billion won in operating profit in the fourth quarter of 2017. The last time that the HE headquarters broke the threshold of 5 trillion won in sales was three years ago when they earned 5.43 trillion won in the fourth quarter of 2014.

For several years, LG Electronics has made an effort to establish itself as a global leader in premium TV market by promoting OLED TVs. Premium TV business is a niche market taking up merely 1 percent of the entire market in terms of the number of units sold, but their unit price, which hovers around 2,500 U.S. dollars, allow them to yield bigger profits and sales margins. Premium TVs are also an effective means to promote the image of a brand as they place more importance on value than price.

The H&A headquarters, which are in charge of home appliances business, have also achieved strong sales despite the fact that the fourth quarter was a slow season for their main products including air conditioners and air purifiers. It was a result of a sustained effort to improve cost structure and expand the sales of premium products such as the “Knock-on Magic Space” refrigerator and “TwinWash” washing machine. Other contributors include the steady sales growth of a new line of products such as “Tromm” dryer and “Code Zero A9” cordless vacuum cleaner as well as the rising demand of home appliances in Europe and Asia, on the back of the recovery of global economy.

It has been reported that LG’s Mobile Communications (MC) headquarters are still suffering operating loss. The imbalance between the strong sales of TV and home appliances and the anemic mobile business remains to be a task to tackle. Stockholders predict that the sales of the MC headquarters for the fourth quarter of 2017 stood somewhere around 3 trillion won, up 7 percent from the previous quarter. The operating profit is expected to record a deficit of 285 billion won, which has slightly shrunk quarter-on-quarter.

Industry experts predict that the Vehicle Components (VC) Business headquarters, which is touted as the next cash cow, recorded sales worth 800 billion won. The sales have increased thanks to the expansion of smart infotainment business and the strong sales of the GM Chevrolet Bolt EV, but the steady need for massive technology investments is translating into marginal amounts of operating loss in each quarter.