The revenue for Q1 2023 stood at KRW 16.26 trillion, a 5.7% YoY decline.
The operating profit of the company declined by 15% YoY.
The revenue from the vehicle solutions segment grew 27% YoY to reach KRW 2.4 trillion.
LG Electronics has generated relatively steady Q1 2023 earnings results thanks to the stabilization of material costs and the continued sales of high-end home appliances. The heat pumps and energy storage devices helped it earn more as the climate change restrictions tightened.
The company’s revenue declined 5.7% YoY in Q1 2023 to KRW 16.26 trillion ($12.75 billion), while the operating profit declined 15% YoY to KRW 1.36 trillion ($1.06 billion) owing to sluggish global demand. Although the profit dropped YoY, it was a considerable improvement over the losses in theprevious quarter.
The business portfolio is experiencing growth through qualitative measures, particularly in expanding B2B segments such as vehicle components and system air conditioners. Besides, non-hardware business revenue continues to increase. The vehicle component solutions segment raked in high profits, contributing almost 15% to the total revenue, up from 11% in Q1 2022.
Financial highlights
The consumer electronics segment’s revenue fell 5.5% YoY to reach KRW 11.38 trillion ($8.9 billion). However, the operating profit increased by 92% owing to lower logistics costs, efficient management of raw material supply, improved spending efficiency and active measures to enhance cost structure. The contribution of this segment to LG’s Q1 operating profit rose to 89.7% from 40% in Q1 2022.
The revenue of the vehicle solutions segment grew 27.1% YoY to reach KRW 2.39 trillion ($1.87 billion) driven by high order backlogs and theelectric vehicle(EV) boom in the automotive market. Supply chain management improvements for key components, like semiconductors, played a crucial role. The operating profit grew to KRW 54 billion ($42.3 million), compared to the loss of KRW 6.7 billion ($5.6 million) in Q1 2022. Although the segment contributed just 4% to LG’s Q1 operating profit, it is touted as the future growth driver.
Revenue from other businesses, which include business solutions, kept declining YoY to reach KRW5 trillion ($1.95 billion), falling 25%. The operating profit dropped 91% YoY to KRW 85 billion ($66.7 million). The segment’s contribution to LG’s Q1 operating profit was only 6.3% compared to 61% in Q1 2022.
LG Innotek’s revenue grew 10.7% YoY to KRW 4.4 trillion ($3.43 billion). The operating profit decreased by 60.4% to KRW 145 billion ($114 million). This brought LG’s consolidated revenue to KRW 20.4 trillion ($16.01 billion).
Market outlook
Amid declining consumption due toeconomic downturn concerns预计,消费电子产品收入下降while profits will remain sluggish in the next quarter. The decreasing IT demand will also have negative impacts on yields. The huge order backlog (KRW 80 trillion) and the ongoing transition to EVs will drive the vehicle solutions segment revenue. Based on the high growth within EV markets, it is expected that the EV component business will continue to take up a larger share in the future. A reliable portfolio of in-car infotainment systems, e-powertrain, headlights and unique solutions will maintain LG’s competitive advantage.
LG Electronics is going aggressive on increasing its technological advantage over competitors. This year, the company plans to invest over KRW 5 trillion ($4 billion) in its most significant capital expenditure in 10 years, mainly in theautomotiveelectronics business. This move aligns with the business strategy of focusing on long-term growth and prosperity. The R&D spending has also been increased by 10% this year. LG wants to sustain growth and ensure consistent profitability by proactively and adaptively addressing shifts in demand across various regions and segments. It also aims to expand eco-friendly enterprises in pursuit of revenue growth through energy-efficient and environment-friendly products.
*LG Innotek’s numbers are not included in the total revenue and have been mentioned separately.
The operating profit of LG Electronics* declined by 133% YoY in Q4 2022.
The revenue for Q4 2022 stood at KRW 15.47 trillion, a 1.6% growth YoY.
The revenue from the vehicle solutions segment grew 44.6% YoY to reach KRW 2.4 trillion.
LG Electronics’* total revenue in Q4 2022 was KRW 15.47 trillion ($11.37 billion), a mere 1.6% YoY growth. This brought the company’s 2022 total revenue to KRW 64.71 trillion ($50.3 billion). Although LG registered a positive YoY revenue growth during Q4 2022, the operating profit declined by 133% YoY, causing losses of KRW 104 billion ($76.6 million). This was primarily due to increased marketing expenditure, increased raw material prices, and currency devaluation compared to the US dollar. The business was also impacted by the extension of geopolitical risks in Europe and interest rate hikes in many nations to reduce inflation. The worseningmacroeconomicconditions weakened consumer sentiment, leading to a decline in consumer electronics sales. The vehicle solutions segment stood as a bright spot due to strong demand and order backlog from auto OEMs.
Financial highlights
The consumer electronics segment’s revenue fell 5.5% YoY to reach KRW 10.88 trillion ($8 billion). Its operating profit decreased by 127% due to rising marketing costs and fixed cost burdens. The contribution of this segment to LG’s Q4 revenue declined to 70.2% from 75.5% in Q4 2021.
Revenue from the vehicle solutions segment grew 44.6% YoY to reach an all-time high of KRW 2.4 trillion ($1.76 billion). This was primarily due to increased OEM orders and an improved automotive supply chain situation globally. Negative external factors like logistics costs and raw material supply chain are easing. Despite increasing expenses associated with running additional manufacturing subsidiaries, profits improved on increased sales. Vehicle solutions accounted for 15.5% of the total revenue in Q4 2022.
At the end of 2022, the vehicle solutions segment had a backlog amounting to KRW 80 trillion ($59 billion), underscoring the company’s position as a key supplier to the global auto industry. Infotainment accounted for more than 60% of the backlog value, xEV parts for 20%, and safety and convenience components for the rest.
Revenue from other businesses grew by 6.7% YoY in Q4 2022 to reach KRW 2.2 trillion ($1.62 billion). But low demand for IT products and global economic headwinds sent the operating profit down by 195% YoY.
LG Innotek’srevenue grew 14.4% YoY in Q4 2022 to KRW 6.5 trillion ($4.8 billion). The operating profit decreased by 60.5% to KRW 169 billion ($124 million). This brought LG’s consolidated revenue to KRW 21.8 trillion ($16.06 billion).
Market outlook
The anticipation of growing inflation, geopolitical uncertainties, mass layoffs andsignificant concernsabout the economy weakening during the initial months of 2023 is likely to further impact LG’s profit in Q1 2023. LG aims to increase profitability by proactively cutting expenses and optimizing cost structures.LGstated that it would continue to improve the competitiveness of its premium goods likeOLED TVs. Despite challenging financial conditions, LG is likely to invest around KRW 22 trillion this year in developing new sectors and broadening its business portfolio.
The vehicle solutions segment has the highest potential to earn high profits in coming quarters owing to a robust strategy to secure long-term product orders and the current order backlogs, despite uncertainties around vehicle demand in 2023. Besides, due to the high demand for infotainment and xEV components, this segment is likely to grow further, leading to a higher share of LG’s revenue.
*LG Innotek’s numbers are not included in the total revenue and have been mentioned separately.
Tesla’s total revenue stood at $24.3 billion in Q4 2022 with 37% YoY growth.
Tesla deployed 2.46 GWh of energy storage during Q4, a growth of almost 152% YoY.
Tesla’s vehicle deliveries are expected to exceed 1.7 million units globally in 2023.
Riding on record 405,278 vehicle deliveries in Q4 2022, Tesla registered a record total revenue of $24.3 billion during the quarter, an increase of 37% YoY. Deliveries rose 31.3% YoY in Q4, bringing the 2022 annual total to1.3 million units. TheUS was the leading marketin Q4, followed by China and Europe. The annual deliveries of Tesla’s premium Model X and Model S grew 167% YoY to reach 66,000 units.
Tesla’s sales inChinafell short of expectations again due to the COVID-19 outbreak. Production at the Shanghai factory, which exported more than 106,000 units in Q4, was halted during the last week of December. Although no specific reason was stated officially, rising COVID-19 cases among workers were a likely cause for the unexpected production halt. On the other hand, the weekly Model Y production in the Berlin factory touched 3,000 units. The rising production in Germany has helped Tesla gain a strong grip on欧元ope’s EV market. The Model Y remained Europe’s top-selling car model during November and December. Tesla’s in-house 4680 cell production rate also reached 1,000 cars per week.
Financial summary
Tesla’stotal revenueduring Q4 2022 stood at $24.3 billion, an increase of 37% YoY. The company generated more than $20 billion from automotive sales. During Q4, the widespread release ofTesla’s full self-driving(FSD) feature generated $0.32 billion in revenue, indicating that the company is striving to increase the proportion of software revenue in its overall product mix.
Revenue from Tesla’sother businesseslike energy storage, solar panel deployment, charging and vehicle servicing grew by almost 72% YoY to exceed $3 billion. Other businesses contributed 12% of Tesla’s Q4 revenue.
Tesla deployed 2.46 GWh ofenergy storageduring Q4. At 151.7%, it saw the highest YoY growth till now.
Tesla’s total revenue for 2022 exceeded $81.4 billion, a 51% YoY growth.
During Q4,gross profitalso increased by 19% YoY and stood at $5.7 billion. In October, Tesla reducedvehicle prices in Chinaafter increasing them a couple of times during H1 2022. Initially, it was thought the increase in demand would make up for the price cut but the negative foreign exchange impact restricted further gross profit growth.
Tesla’sinventoryin Q4 stood at 34,423 units, bringing the annual total to 55,760 units. The COVID-19 outbreak in China and the increased production in the Berlin factory are probable causes of the higher inventory. In addition, Tesla is facing stiff competition as legacy automakers and new players are offering more affordable EVs. In January 2023, Tesla lowered prices globally, which may help in clearing out inventories and achieving economies of scale.
Outlook
Tesla’s strong fundamentals are expected to keep the company ahead of most other electric vehicle brands globally. Tesla announced price cuts in January 2023, which has resulted in the demand ballooning to twice the production. Besides, pilot production of the Tesla Semi began in 2022 and the vehicle is expected to hit the road soon. The company also plans to start production of theCybertruck在2023年代中期。此外,特斯拉最近宣布an investment of $3.6 billion to set up a 100GW capacity cell factory and a high-volume semi factory. Tesla’s 2023 vehicle deliveries are projected to exceed 1.7 million units, with a 31% YoY growth. This seems attainable if the company’s recent price cuts remain in effect for most of the year.
Q3 2022 revenue increased 8% YoY to reach ₩16.12 trillion helped by higher sales of vehicle solutions.
Vehicle solutions revenue jumped 46% YoY during the quarter, helped by the improved global semiconductor supply and increased auto production in China.
Operating profit increased 33% YoY to reach ₩0.79 trillion.
LG Electronics(LG) reported an 8% YoY growth in Q3 2022 revenue to reach ₩16.12 trillion despite considerable macro headwinds but helped by higher sales in its vehicle solutions and business-to-business segments. Quarterly gross profit rose 5% YoY to ₩5.05 trillion while operating profit grew sharply by 33% YoY to reach ₩0.79 trillion.
During the quarter, investor sentiment was weak due to a steep devaluation of the South Korean won against the US dollar, hurt by strongeconomicheadwinds. The Korea Composite Stock Price Index (KOSPI) fell 6.5% in Q3 2022, which negatively affected LG’s performance.
Financial highlights:
从消费电子部门的收益下降1% YoY to ₩11.19 trillion due to increased logistics costs and lower demand for premium products like TVs. This segment contributed to 69% of total revenue during the quarter.
Among all the segments, vehicle solutions was the best performer. The segment’s revenue jumped 46% YoY to ₩2.35 trillion during the quarter helped by the relative improvement in the globalsemiconductorsupply chain. The segment accounted for 15% of the company’s total revenue.Chinafaced a lot of factory shutdowns in the preceding quarter due to regulations related to the COVID-19 pandemic. As factories reopened in Q3, there was an increase in production which helped meet the heightened demand for electronics components in the automotive industry. This, combined with an improved cost structure, helped LG achieve strong growth figures for the period.
Revenue from other businesses grew 23% YoY reaching ₩2.60 trillion. Despite an increase in sales, the profitability of this segment decreased 63% due to lower demand for IT products and higher raw material costs.
LG’s gross profit increased 5% YoY to reach ₩5.04 While the company’s operating profit grew sharply, gross profit growth was relatively muted because of increased market competition, low consumer demand, increased raw material prices, increased marketing expenses and the energy crisis.
Market outlook:
The current global business environment is quite difficult, burdened by rising inflation, supply chain disruptions,geo-politicaltensions, increased logistic costs and the energy crisis, which have weighed negatively on consumer sentiment across industries. LG plans to prioritize on the development of new software platforms and adjust its channel inventory to overcome the ongoing crisis. LG will focus on its premium consumer electronics products and will likely maintain maximum margins to secure high profits. The company will also apply cost-saving initiatives to reduce raw material costs.
The vehicle solutions segment has the highest potential to expand as the global semiconductor shortage is easing out and OEMs like Honda, GM and Stellantis are working to jointly produce battery cells. Moreover, LG has secured an order worth ₩1 trillion fromTeslato supply automotive camera modules for the Tesla Model 3, Model Y and Cybertruck. These new deals will drive LG’s vehicle solutions segment to a great future.
LG is also strengthening its focus on new technologies likemetaverseandrobotics. It recently partnered with KT Corporation to expand its AI robot service business. LG will also establish an R&D centre and develop robots for logistics, education and healthcare services. LG’s strategic partnership with TmaxMetaverse will boost development across metaverse solutions and web-based metaverse services. The company will have the opportunity to capitalize on these technologies by the time they mature at the end of the decade, which will help it boost revenue.
Revenue reached a new record high of $14.48 billion during the quarter.
Operating profit recovered to a respectable level.
Other businesses registered the highest QoQ revenue growth of 51%.
In 2021, LG shut its智能手机business, which was generating nearly 6% of its total revenue. The closure of this segment has not affected the company much.LG’s revenue increased by more than 16% YoY in Q1 2022 to reach a new record high of $14.48 billion. 46% of this revenue was generated by strong demand for premium products across overseas markets. LGInnotek’s numbers are not included in this analysis.
Revenue from the vehicle solution business grew sequentially. Vehicle sales have been facing a tough time globally due to component shortages but LG is benefiting from the slight rebound. It has alsosigned dealswith leading auto OEMs like Mercedes-Benz, to whom it will provide ADAS andcockpitsolutions. Besides the electronics and vehicle solution segments, LG’s other businesses also witnessed growth in Q1 2022. There has been a sustainable growth in the sales of products for the B2B segment. Moreover, LG’s energy-related solutions (LG Chem) business, which has been included in other segments, contributed to a steep revenue rise. Price hikes of certain high-demand products also contributed to the high revenue generation during Q1 2022.
The revenue could have been more in the absence of the latest COVID-19 lockdowns in China and the Russia-Ukraine war. Also, therestricted supplyof a few key raw materials and increased logistics costs negatively impacted the production.
Q1 2022 Financial Highlights
Revenue from the consumer electronics segment stood at $10.03 billion, an increase of 3.2% QoQ. This segment contributed to nearly 69% of the total revenue.
Revenue from the vehicle solutions segment stood at $1.56 billion, an increase of 13.3% QoQ. This segment contributed 10.8% of the total revenue. By strengthening business risk management and continuously improving the cost structure across products, LG reduced this segment’s losses by 33% in just two quarters.
Revenue from other businesses reached $2.89 billion, an increase of 49% QoQ. This huge increase was due to the transfer of LG’s electric battery business to this segment from the vehicle solutions segment.
LG’s gross profit reached $4.93 billion, a 28% QoQ increase. Gross profit was down during the last quarter due to supply chain disruptions following COVID-19 and increased raw material prices.
MarketOutlook
LG Electronics’ future looks promising with the adoption of newer and advanced technologies across segments. Technologies like Plug-in for Intelligence Equipment (PIE) and Machine-learning based Vision Inspection system (MAVIN) are helping the company to minimize material loss and logistic delays. All these developments will have a positive impact on the coming quarter’s financials.
In the vehicle solutions segment, we expect to see a rise in business as demand forsmart cartechnology combined with increased demand forin-vehicle connectivityis increasing. Being a leader in this segment, LG will leverage its position by forming various JVs and partnerships that will boost its future revenue generation from this segment. Apart from providing hardware solutions for automotive, LG is also entering the automotive software solutions space with its recent acquisition of TISAX and Cybellum.
Apart from the electronics and vehicle solutions segments, developments in LG’s other segments like energy storage and sales have been noteworthy. Recent partnerships for energy solutions have provided the segment with the necessary boost. Moreover, the increasing demand for EVs will only help the energy solution segment to grow from this point onwards.
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