LG Electronics expected to post over $7.6 bn sales from EV components this year

[Photo provided by LG Electronics]

LG Electronics Inc. is expected to achieve 10 trillion won ($7.6 billion) in sales this year from its electric vehicle (EV) components business and have 100 trillion won worth of work in its order book.

According to a compilation of local brokerage consensus on Monday, LG Electronics’ Vehicle component Solutions (VS) business is projected to post 10.8 trillion won in sales this year, which is up by more than 20 percent from last year’s 8.6 trillion won.

It would be the first time in six years for an LG Electronics’ business to post sales surpassing 10 trillion won, except for its key home appliance and TV businesses. In 2017, the company’s mobile communications division that was in charge of mobile phone business had posted 11.2 trillion won in sales.

The annual sales of the VS business are projected to account for more than 10 percent of LG Electronics’ entire sales this year thanks to the steep growth, up from 7 percent in 2018 and over 9 percent in 2020.

According to recent data from Kiwoom Securities Co., LG Electronics’ total revenue is projected to reach 87.48 trillion won this year. The VS division is likely to account for 12 percent of the total sales based on the forecast.

The order backlog of the VS division is also expected to reach 100 trillion won at the end of this year, according to industry projections.

“We expect nearly 30 trillion won worth of new orders this year, on top of the 27 trillion won last year, thanks to the growing demand for electric vehicles despite an overall slowdown in the demand for global automobiles,” BNK Securities Co. said.

The robust growth of LG Electronics’ VS business shows that the tech giant has secured a growth engine other than its traditional strengths like home appliances and TVs. Analysts note that the market may re-assess the valuation of the company.

“LG Electronics’ auto component business is doing far better than expected,” said Kim Ji-san, head of research at Kiwoom Securities. “Together with its new businesses like robotics and EV charging infrastructure, which are both on track, they will serve as a reference point for corporate re-evaluation.”