Seoul, South Korea-LG Electronics Co. announced on Friday a significant 33.5% increase in its operating profit for the third quarter of this year, largely fueled by robust sales in new platform services and automotive electronics. The performance surpassed market expectations.
According to a new release by Yonhap News Agency, operating income for the July-September period reached 996.7 billion won (US$738.2 million), a jump from last year's 746.6 billion won. The reported operating profit was 24.9% higher than the average estimate, as per a survey conducted by Yonhap Infomax, the financial data arm of Yonhap News Agency.
The company also reported a net profit increase of 44.2% to 485.2 billion won, even though sales declined by 2.2% to 20.7 billion won.
LG Electronics attributed the strong bottom line to its business-to-business segments, which include automotive electronics and air solutions. These segments accounted for over 30% of the company's sales. Additional contributions came from new platform-based service businesses, which integrate high-end home appliances and content subscription services.
In the breakdown of its divisions, the home appliance business of LG Electronics logged quarterly sales of 7.46 trillion won and an operating profit of 504.5 billion won. The TV business generated sales of 3.57 trillion won and an operating profit of 110.7 billion won.
The company's vehicle components business, identified as a future growth driver, posted a record operating profit of 134.9 billion won and sales of 2.5 trillion won. According to LG Electronics, the automotive electronics segment is anticipated to achieve an annual sales figure of 10 trillion won by the end of the year and is slated to become the company's flagship business.
In a forward-looking statement, LG Electronics indicated that it aims to enhance its business structure in the fourth quarter by expanding its business-to-business (B2B) and non-hardware sectors. "We plan to expand sales of our key products to meet rising demand in the peak season at the end of the year, and expect our automotive electronics business will lead brisk sales of our B2B business," the company said.
The company also revealed plans to capitalize on the trends of decarbonization and electrification in the high-performing air solutions sector. Recently, LG Electronics has partnered with the state government of California to supply 6 million heat pumps by 2030.
Despite the positive financial figures, shares of LG Electronics declined 3.51% to close at 101,600 won on Friday, underperforming the broader KOSPI's 0.16% gain.