LG Elec eyes automotive electronics orders to stretch $54.2 bn year-end and first profit Q2

South Korea’s LG Electronics Inc. anticipates order book in automotive electronics running to 70 trillion won ($54.2 billion) by the end of the year after delivering its first profit from the business in the second quarter, according to company and industry sources.

LG Electronics’ automotive lighting systems subsidiary ZKW on Tuesday announced it was supplying LED lightning to Swedish automotive brand Volvo’s new EV models C40 and XC40.

The headlight in the new cars combines daytime running lights, position lights and turn signal lights in a particularly compact form, it added.

Austria-based ZKW is dubbed to be the world’s best in automotive headlight. German premium finished vehicle brands are its customers, including Mercedes-Benz, BMW, Audi and Porsche. It won order from Jaguar Land Rover to deliver smart headlights to new Range Rover vehicles before the latest deal with Volvo.

ZKW acquired in 2018 at 1.4 trillion won acts as one of the Korean electronics giant’s three pillar vehicle component solutions businesses.

The VS division responsible for the infotainment business has also gained traction. Early this year, the division successfully bagged an order to supply its plastic OLED-based infotainment system to Mercedes-Benz’ EQS (IVI).

LG Magna e-Powertrain, its JV with Canada-based world’s third-largest auto parts company Magna International Inc., is LG’s another core vehicle component business that mainly focuses on EV parts. Since its launch last year, the JV has been rapidly expanding its business and in April held a groundbreaking event for a new factory to manufacture inverters, motors and on-board chargers to support General Motors’ EV production. Once completed, it would become LG Magna e-Powertrain’s third manufacturing base to target the North American market after Incheon in Korea and Nanjing in China.

The order backlog of LG’s vehicle electronics is expected to reach 70 trillion won by the end of 2022 after achieving 60 trillion won a year earlier amid growing demand from global finished vehicle makers.

The sector is projected to make the first profit of about 40-50 billion won.

[Source: LG Elctronics Inc.]

The VS business, launched in 2013, surprised the market with an operating profit of 5 billion won in the fourth quarter of 2015, but since then it has logged a loss for 25 consecutive quarters.

The division was expected to swing to a profit in the first three months of this year but delivered an operating loss of 6.3 billion won due to protracted chip shortages.

“LG Electronics’ VS business seems to have returned to a profit in the second quarter thanks to expanded high-profitable infotainment projects,” said Kim Ji-san, an analyst at Kiwoom Securities. “Backed by eased chip shortages and OEM business disruptions, the division is expected to continue report profits in the latter part of this year.”

LG Electronics’ CEO Cho Joo-wan, also known as William Cho, visited ZKW in December last year for his first overseas tour since inauguration to meet Dr. Wilhelm Steger, newly appointed CEO of ZKW.

LG Electronics shares were trading 0.67 percent lower at 88,400 won in Seoul trading at 10:46 a.m. Wednesday.

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