Highest Third-Quarter Sales in History, Best Profitability in Decade
LG Electronics Inc. (LG) announced record-breaking third-quarter consolidated revenues of KRW 15.7 trillion (USD 13.15 billion) and operating profit of KRW 781.4 billion (USD 654.4 million) for the July-September period. Sales increased 1.8 percent and operating income was 4.4 percent higher compared with the same period last year, primarily due to the strong performance of the home appliance, home entertainment, and business solutions business units, while losses narrowed for mobile communications in the quarter.
The LG Home Appliance & Air Solution Company reported its highest third-quarter sales of KRW 5.33 trillion (USD 4.46 billion), increasing nearly 10 percent from the same period last year thanks to strong performance in North America, Europe, Asia, and the Middle East. Operating income of KRW 428.9 billion (USD 359.2 million) represented a 3.8 percent increase from the third quarter last year due to a combination of improved sales, ongoing cost reductions, and lower raw material prices.
The LG Home Entertainment Company recorded quarterly revenues of KRW 3.87 trillion (USD 3.24 billion), an increase of 3.5 percent from the 2018 period, reflecting strong sales in Latin America and the Middle East. Although operating income of KRW 318 billion (USD 266.3 million) declined slightly from a year ago due to intense market competition and a weaker exchange rate, strong sales of premium products such as OLED TVs resulted in a healthy quarterly operating margin of 8.2 percent for the quarter.
The LG Mobile Communications Company reported sales of KRW 1.52 trillion (USD 1.27 billion) for the quarter in a challenging global smartphone market. Compared with the previous quarter, the operating loss narrowed significantly to KRW 161.2 billion (USD 135 million) due to production efficiencies and cost improvements.
The LG Vehicle Component Solutions Company generated quarterly revenues of KRW 1.34 trillion (USD 1.12 billion), an increase of 14 percent from the third quarter last year thanks to increased sales in infotainment systems. Higher mass production setup costs related to new projects contributed to an operating loss of KRW 60.1 billion (USD 50.3 million) in the third quarter of 2019.
The LG Business Solutions Company reported sales in the third quarter of KRW 698.7 billion (USD 585.2 million), 21.2 percent higher than the same quarter last year due to stronger sales of information displays and solar modules in key markets. Operating income increased 90 percent year-on-year to KRW 66.8 billion (USD 55.9 million) as a result of improved productivity and higher sales.
2019 3Q Exchange Rates Explained
LG Electronics’ unaudited quarterly earnings results are based on IFRS (International Financial Reporting Standards) for the three-month period ending September 30, 2019. 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 1,194 per USD.