LG Elec discussing partnership with European carmaker on auto electronics

[Photo by Han Joo-hyung]

LG Electronics Inc. is discussing partnership in electronic components behind autonomous vehicle with a European carmaker as it double downs on automotive electronics for new growth after having shed money-losing smartphone business and taken command in the global white-goods category.

“Although we are unable to disclose details for now, we have been carrying out a self-driving vehicle related components project for a major European finished carmaker and Korean firms,” Kim Joo-yong, an official from LG Electronics Vehicle Component Solutions (VS) division, said during an earnings conference call on Thursday.

The company is jointly working with an unnamed finished car maker in Europe to develop parts for automotive driving solutions.

LG Electronics Omnipod, a self-driving autonomous home on wheels. [Source: LG Electronics Inc.]

The company expects it would take some time before commercializing self-driving car components due to regulatory hurdles and reliability issues in technology, but the company is seeking to carter to clients’ needs, said Kim.

LG Electronics has been making significant progress in its new growth VS business, but the company expects that it would be hard for the VS division to turn around in the first quarter amid the ongoing automotive chip shortages.

VS division logged an operating loss of 53.6 billion won ($44.5 million) in the fourth quarter ended December 2021 due to the production disruptions at finished car makers amid chip shortages. But it was narrower than the previous quarter’s 537.6 billion won operating loss. For the full 2021, the division raked in its record high sales of over 7 trillion won.

The company’s plan to foster its automotive components and solutions business is expected to pick up speed as it has finally claimed the world’s No. 1 home appliance title last year.

The Korean electronics said in a regulatory filing on Thursday that home appliances division recorded 27.1 trillion won in sales for 2021, beating $21.9 billion (about 25 trillion won) sales of longstanding global champion Whirlpool.

The company's overall business operating profit for the full year last year reached 3.9 trillion won, down 1.1 percent from 2020, while sales grew 28.7 percent to 74.7 trillion won. It was the first time for the company’s annual sales to exceed 70 trillion own.

For the fourth quarter, it posted 677.7 billion won in operating profit, up 25.3 percent on quarter but down 21.4 percent on year. Revenue totaled at a record high of 21 trillion won, up 11.8 percent on quarter and 20.7 percent on year.

Income from operations fell in the fourth quarter and full 2021 from a year earlier due to rise in raw materials prices and logistics costs.

Home appliances business generated 157.1 billion won in operating income over 6.5 trillion won sales in the fourth quarter, thanks to robust growth in demand for its high-end Objet and Signature appliance collections, especially in North America.

Home Entertainment division, where TV business belongs, reported an operating income of 162.7 billion won over record sales of 4.99 trillion won in the fourth quarter, led by OLED TVs and large-sized premium TV sets.

Vehicle component solutions division earned 1.7 trillion won in sales with operating loss of 53.6 billion won in the quarter, while business solutions division reported operating loss of 35.1 billion won despite the best fourth quarter sales of 1.7 trillion won.

On Friday morning, shares of LG Electronics rose 2.02 percent to 126,500 won.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]