LG Electronics has achieved record second-quarter results, driven by strong fundamentals in its core businesses, including home appliances and TVs, as well as tangible outcomes from new ventures. The company is being praised for its proactive approach in accounting for voluntary retirement costs, which had raised market concerns, indicating a trajectory of long-term growth.
On July 7, LG Electronics announced preliminary consolidated revenue of 23.8297 trillion won and an operating profit of 1.5788 trillion won for the second quarter. These figures represent increases of 14.9% and 146.9%, respectively, compared to the same period last year, marking the highest second-quarter revenue and operating profit in the company's history.
The operating profit exceeded the market consensus of 1.074 trillion won by 47%, continuing a trend of surpassing 1 trillion won in operating profit for two consecutive quarters.
For the first half of the year, combined revenue reached 47.5569 trillion won, with an operating profit of 3.2525 trillion won, surpassing last year's total annual operating profit of 2.4784 trillion won in just six months.
Despite the inclusion of costs related to voluntary retirement aimed at workforce optimization, LG Electronics achieved better-than-expected results. In April, the company implemented a voluntary retirement program targeting senior employees and some in their 40s for the second consecutive year. Given that last year’s costs were approximately 400 billion won, it is estimated that a similar one-time expense was accounted for this year.
LG Electronics stated, "Despite the costs associated with the voluntary retirement program conducted in April, we minimized the impact on profitability through improvements in cost competitiveness across all business areas and proactive management measures."
Additionally, the company benefited from a refund of tariffs paid during exports to the U.S. last year, following a ruling by the U.S. Supreme Court that recognized some illegality in the tariff policies implemented during the Donald Trump administration.
Industry analysts believe that LG Electronics has ultimately expanded its business profitability. The growth in sales of home appliances, the success of subscription-based products, and the increase in high-margin sales in the automotive division have all contributed to the overall profitability of the company.
In the home appliances sector, the success of subscription-based products has reportedly led to an operating profit margin exceeding 10%. Notably, the premium product sales in the TV segment, including OLED models, and the revenue from the proprietary platform 'webOS' have improved profit margins.
The automotive division has also expanded its premium infotainment sales based on a strong order backlog, effectively serving as a key cash cow for business-to-business transactions. After ten years since its establishment, the division's order backlog has surpassed 100 trillion won, solidifying its role as a core growth driver for the company.
Noteworthy achievements are also evident in the future-oriented heating and cooling and robotics sectors. The quality testing for the 'AI cooling system for data centers' aimed at North American hyperscale customers, where power demand has surged, is nearing completion. Once orders are finalized, tangible contributions to performance are expected within the next six months.
In the robotics sector, in collaboration with NVIDIA, the company is enhancing algorithms through 'physical AI,' moving beyond simple hardware supply to secure platform capabilities.
LG Electronics stated, "We will continue to build a sustainable profit structure through the advancement of a high-profit-centered business model and proactive risk management."
* This article has been translated by AI.
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