LG Electronics’ vehicle solution-related sales on track for $7.4bn sales in 2023

LG Electronics Chief Executive Officer Cho Joo-wan

South Korean tech giant LG Electronics Inc. is on track to achieve the future vision shared by its Chief Executive Officer Cho Joo-wan by excelling both at sales and profitability through its business-to-business (B2B) transactions and content platform business.

Hopes are high that LG Electronics’ Vehicle Solutions (VS) business will emerge as a new cash cow, with its sales projected to surpass 10 trillion won ($7.4 billion) this year.

LG Electronics announced Friday that it posted 996.7 billion won in operating profit in the third quarter on sales of 20.71 trillion won.

The strong performance is expected to boost the company’s business portfolio shift set by Cho.

Solid earnings were led by strong growth in B2B sales and content platform-led high profitability, according to sources.

LG Electronics announced in July that it would focus on non-hardware business model innovation, B2B growth, and new business growth engines to achieve its 2030 Future Vision.

Sources noted that enhanced profitability from the growth in the non-hardware business contributed to the company’s positive earnings.

In the third quarter, the Home Entertainment (HE) Division posted sales of 3.57 trillion won and an operating profit of 110.7 billion won, up sharply from 3.71 trillion won and 55.4 billion won, respectively, in the same period last year.

Non-hardware areas such as content, services, and subscriptions have been the drivers of greater profits.

Another key driver of the good results was the B2B segment, which has continued to grow, with its share in the entire sales of the company exceeding the mid-30 percent mark.

The VS Division, which oversees the electronics device business, posted strong results in the third quarter with 2.5 trillion won in sales and 134.9 billion won in operating profit. The sales figure was the highest for a third quarter and the operating profit the quarterly highest.

Some observers note that the order backlog will exceed 100 trillion won this year.

Analysts say that enhanced performance of the Appliance & Air Solution (H&A) Division, responsible for home appliances, amid an ongoing decline in demand for home appliances was driven by the B2B business.

H&A delivered 7.46 trillion won in third-quarter sales and 504.5 billion won in operating profit, more than double that of the same period last year.

The B2B segment boosted sales and operating profit with its heating, ventilation, and air conditioning businesses.

New businesses, in the meantime, are still in their early stages. The company aims to find growth momentum in future industries, such as electric vehicle charging and digital healthcare.