LG Electronics, a South Korean consumer electronics giant, reported a significant decline in its operating earnings for the fourth quarter of 2022. The company’s operating profit was recorded at 69.3 billion won ($56.1 million), a decline of 90.7 percent from the same period the previous year.
This marks the first time that the company has reported a quarterly operating income of less than 100 billion won since the fourth quarter of 2018. The company attributed the sluggish performance to a high base effect from the pent-up consumer demand for home appliances during the pandemic.
The company also recorded a net loss of 212.4 billion won for the fourth quarter, compared to a profit of 21.3 billion won in the previous year. However, it reported record high quarterly sales of 21.85 trillion won, an increase of 5.2 percent from the previous year.
For the full year of 2022, LG posted 3.55 trillion won in operating profit, compared to 4.05 trillion won in the previous year. The company also recorded a record high in sales, surpassing 80 trillion won for the first time in its history.
The main home appliance business and the promising vehicle component business drove the gains. Last year’s sales from the vehicle component solutions division accounted for more than 10 percent of the total sales. After its establishment in 2013, the division recorded a profit for the first time with an operating income of 169.6 billion won last year.
Despite the unfavorable business environment, LG plans to focus on finding additional growth engines through premium strategies and the expansion of high-value-added and high-profit orders. The company also plans to strengthen its competitiveness of premium products and overcome the impact of reduced demand by expanding products in the volume zone that it has prepared.
Additionally, the company will maintain a business structure that can continuously secure profitability by maximizing the effect of cuts and reducing costs through emergency management.
Also, LG Electronics is looking to diversify its revenue streams by focusing on expanding its vehicle component solutions division. The division recorded a profit for the first time in 2022 with an operating income of 169.6 billion won. This division is expected to play a significant role in driving the company’s growth in the future.
The company also acknowledged that the decline in disposable income and the recovery of consumer sentiment will take a considerable time, but they are optimistic that they will be able to overcome the impact of reduced demand by expanding products in the volume zone that they have prepared.
LG officials stated that they will continue to strengthen their competitiveness of premium products, while also maximizing the effect of cost cuts and reducing costs through emergency management.
In conclusion, LG Electronics reported a significant decline in its operating earnings for the fourth quarter of 2022, due to the high base effect from the pent-up consumer demand for home appliances during the pandemic. However, the company recorded record high quarterly sales, and it plans to focus on finding additional growth engines through premium strategies and the expansion of high-value-added and high-profit orders.
The company also looking to diversify its revenue streams by focusing on expanding its vehicle component solutions division which is expected to play a significant role in driving the company’s growth in the future.