Highest Annual Profit for Home Appliance and Home Entertainment Businesses in LG History
LG Electronics Inc. (LG) today announced record full-year revenues of KRW 61.3 trillion (USD 54.4 billion) in 2018, exceeding sales of 60 trillion won for the second year in a row. Full-year profit of KRW 2.70 trillion (USD 2.40 billion) increased nearly 10 percent from 2017 reflecting record profitability from appliances and home entertainment products.
Fourth-quarter 2018 revenues of KRW 15.77 trillion (USD 13.99 billion) were higher than the third quarter but 7 percent lower than the last quarter of 2017 primarily due to lower sales of mobile products. As a result, fourth-quarter operating income declined to KRW 75.7 billion (USD 67.1 million).
The LG Home Appliance & Air Solution Company reported full-year 2018 revenues of KRW 19.36 trillion (USD 17.17 billion), an increase of nearly 5 percent from the previous year, generating a profit of KRW 1.52 trillion (USD 1.35 billion), the highest in company history. Fourth-quarter revenues of 4.33 trillion (USD 3.84 billion) increased more than 3 percent from the same period last year with sales in Asia and Europe holding steady despite exchange rate challenges in Central and South America and political uncertainty in the Middle East. LG’s strongest performing unit in 2018 is expected to again lead the company this year with strong demand for premium products and consistent growth in South Korea while working to mitigate international trade and exchange rate risks overseas.
The LG Home Entertainment Company recorded full-year revenues of KRW 16.21 trillion (USD 14.37 billion) with a record-high profit of KRW 1.52 trillion (USD 1.35 billion) thanks to the strengths of LG’s premium product lineup. Fourth-quarter 2018 sales of KRW 4.56 trillion (USD 4.04 billion) were 6 percent lower from the previous year but 23 percent higher than the previous quarter due in large part to strong seasonal demand. Going forward, LG intends to grow both revenue and operating profit by focusing on increasing sales of premium OLED TVs and large-screen Ultra HD TVs.
The LG Mobile Communications Company reported 2018 revenues of KRW 7.98 trillion (USD 7.08 billion) with sales in the fourth quarter totaling KRW 1.71 trillion (USD 1.51 billion), a decrease of 16 percent from the third quarter. Although the full-year operating loss increased to KRW 790.1 billion (USD 700.65 million), the mobile division’s business structure showed improvement as a result of better material cost controls and overhead efficiencies based on the company’s platform modularization strategy. In 2019, LG’s mobile division will push 5G products and smartphones featuring different form factors while focusing on key markets where the LG brand remains strong.
The LG Vehicle Components Company reported solid full-year 2018 revenues of KRW 4.29 trillion (USD 3.80 billion), a 28 percent increase from 2017. Quarterly revenues of KRW 1.4 trillion (USD 1.24 billion), the highest performing quarter in the division’s history, were 71 percent higher than the same period last year and nearly 20 percent more than the third quarter largely due to new infotainment orders and strong performance from the ZKW business in Europe. Uncertainties in the vehicle component market related primarily to international trade issues are expected to contribute to flatter growth in the industry in the months ahead.
The LG Business-to-Business Company, recorded full-year 2018 revenues of KRW 2.41 trillion (USD 2.13 billion) with profit of KRW 167.8 billion (USD 148.8 million). The business unit recorded revenues of KRW 597.8 billion (USD 530.1 million) in the fourth quarter – down 11 percent from the same period the year before while up 4 percent from the previous quarter. Fourth-quarter operating profit of KRW 14.9 billion (USD 13.2 million) was impacted by increased investments, the effects of import tariffs and the continuing price depreciation of solar panels, which offset cost improvements. Despite this, LG plans to increase profitability in the business unit by diversifying target markets for its solar business, maximizing the operation of its U.S. solar factory and targeting new growth areas for its information display business.
2018 4Q Exchange Rates Explained
LG Electronics’ unaudited quarterly earnings results are based on IFRS (International Financial Reporting Standards) for the three-month period ending December 31, 2018. Amounts in Korean won (KRW) are translated into U.S. dollars (USD) at the average rate of the three-month period of the corresponding quarter — KRW 1,127.66 per USD.