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LG Electronics Q3 2024 Earnings: Record Revenue Amid Profit Headwinds

General Report May 18, 2025
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TABLE OF CONTENTS

  1. Summary
  2. Q3 2024 Financial Results Overview
  3. Revenue Growth Drivers
  4. Profitability Challenges and Cost Pressures
  5. New Business Initiatives Underperforming
  6. Strategic Outlook and Next Steps
  7. Conclusion

1. Summary

  • In the third quarter of 2024, LG Electronics achieved a historic quarterly revenue of ₩22.1764 trillion, a remarkable feat marking the fourth consecutive quarter of year-on-year sales growth. This record revenue reflects a strong performance primarily attributed to the growth in the B2B (Business-to-Business) segment and the Home Appliance (H&A) division, which reported consistent demand despite challenges in the operational landscape. However, this impressive revenue growth was marred by a significant decline in operating profit, which fell by 20.9% to ₩7.519 trillion. The substantial dip in profitability illustrates the ongoing pressures from heightened logistics costs, marketing expenses, and geopolitical uncertainties that have characterized the marketplace in recent quarters.

  • An analysis of the company’s performance relative to previous quarters indicates a resilient recovery, as Q3 2024 achieved a year-on-year revenue increase of 10.7%. Notably, the H&A segment displayed robust numbers, recording revenues of ₩8.3376 trillion and profits of ₩5.272 trillion, indicating an 11.7% rise in revenue and a 5.5% increase in operating income compared to the prior year. This reveals a shift in consumer preferences towards high-quality home appliances amid economic challenges, allowing LG to sustain a streak of revenue growth despite declining margins. The B2B segment, particularly in HVAC solutions, played an instrumental role in offsetting operational difficulties and contributed significantly to the revenue surge.

  • However, the company continues to grapple with profitability challenges, primarily driven by rising logistics costs exacerbated by global economic conditions and geopolitical tensions. Increased marketing expenditures aimed at stimulating sales put additional strain on profit margins, illustrating a complex operational environment that LG must navigate. Additionally, strategic initiatives in new business verticals, such as subscription services and vehicle solutions, have yet to yield meaningful returns, further complicating the financial scenario. Despite these headwinds, LG is actively focusing on optimizing its supply chain, enhancing shareholder returns, and strategically diversifying its portfolio to harness sustainable growth moving forward.

2. Q3 2024 Financial Results Overview

  • 2-1. Confirmed revenue and operating profit figures

  • In the third quarter of 2024, LG Electronics reported a historic revenue of ₩22.1764 trillion, marking the highest quarterly sales in its history. Despite this record revenue, the company's operating profit faced a decline of 20.9% to ₩7.519 trillion compared to the same period last year. This decline in operating profit, despite revenue growth, highlights the ongoing pressures from elevated operational costs.

  • 2-2. Comparison with previous quarters

  • When comparing Q3 2024 results to previous quarters, LG Electronics achieved a 10.7% increase in total revenue year-on-year. However, it is crucial to note that the operating profit in Q3 2024 is the fourth highest recorded for this quarter over the years, indicating fluctuations in profitability amidst revenue growth. The significant margin reduction is a concern that reflects the cost pressures faced by the company, particularly from external variables.

  • For instance, the Home Appliance and Air Solution (H&A) division achieved revenues of ₩8.3376 trillion with an operating profit of ₩5.272 trillion, successfully displaying a resilient growth of 11.7% in revenue and 5.5% in profit on a year-over-year basis. Such comparisons reveal a contrast between the robust sales performance in previous quarters and the profit erosion currently experienced.

  • 2-3. Continuation of revenue growth streak

  • LG Electronics has now achieved four consecutive quarters of year-on-year revenue growth, signaling a sustained upward trend in sales. This consistent growth is largely driven by the expansion of its B2B segment and a renewed focus on high-demand sectors despite external challenges. The resilience shown by the company even with growing logistical costs and geopolitical tensions highlights the effectiveness of its strategic business transformations.

  • Moreover, LG's initiatives, such as the expansion of its home appliances business and improvements in the B2B segment, have played a pivotal role in maintaining this growth streak. These efforts demonstrate LG's commitment to adapt and thrive within an increasingly challenging economic landscape.

3. Revenue Growth Drivers

  • 3-1. Expansion of B2B segment

  • In the third quarter of 2024, LG Electronics highlighted significant growth in its B2B segment, contributing to the company's record revenue. The B2B operations, particularly in HVAC (Heating, Ventilation, and Air Conditioning), played a pivotal role in offsetting challenges posed by rising logistics costs and the competitive landscape. As of this quarter, the B2B segment had shown resilience despite external pressures, achieving notable year-on-year growth. The cumulative performance in the B2B field is expected to bolster LG's overall market position, particularly as demand continues to recover at varying rates across different geographies.

  • 3-2. Strong performance in H&A (Home Appliance)

  • The Home Appliance and Air Solution (H&A) segment was instrumental for LG Electronics, reporting sales of ₩8.3376 trillion and operating profit of ₩5.272 trillion in Q3 2024. This translated to a 11.7% increase in revenue and a 5.5% increase in operating income year-on-year, marking the H&A sector as a crucial revenue driver amid a challenging operating environment. Enhanced product offerings, including premium segments of refrigerators and washing machines, alongside innovative approaches in consumer subscriptions, have demonstrated LG's strategic pivot towards maintaining a competitive edge. Despite an overall decline in market demand in certain areas, the H&A division has successfully navigated fluctuations by focusing on value-added services and improving operational efficiencies.

  • 3-3. Contributions from subscription and D2C models

  • The introduction and expansion of subscription services and Direct-to-Consumer (D2C) models have begun to reshape LG Electronics' revenue streams. As of Q3 2024, the company's appliance subscription revenue reached ₩1.3 trillion, marking a growth of over 50% compared to the previous year. This revenue stream now accounts for more than 20% of total appliance revenues, up from 15% the prior year. Notably, LG's push into the Asian markets, including Malaysia, Thailand, and potential ventures in India, reflects a strategic decision to deepen its market penetration through innovative business models. While still nascent, these subscription services serve as a significant growth avenue that aligns with shifting consumer behaviors and preferences for flexible payment solutions in high-value products.

4. Profitability Challenges and Cost Pressures

  • 4-1. Impact of surging logistics and shipping costs

  • In Q3 2024, LG Electronics faced significant profitability challenges, primarily attributed to a substantial increase in logistics and shipping costs. The company reported a 20.9% decline in operating profit, which plummeted to ₩7.519 trillion despite achieving record quarterly revenue. This cost escalation was largely driven by rising global maritime freight rates, exacerbated by geopolitical tensions, particularly in the Middle East, and the repercussions of the U.S. tariffs imposed on China.

  • The spike in logistics expenses fundamentally strained the company’s cost structure. LG Electronics indicated that they initiated negotiations with high-cost shipping companies to adjust freight rates, aiming to mitigate the adverse financial impact. Despite these challenges, the company managed to maintain its revenue growth streak, marking four consecutive quarters of year-on-year sales increases, with Q3 revenue reaching ₩22.1764 trillion. However, the pressure from logistics costs continued to hinder profitability.

  • 4-2. Effects of geopolitical tensions on supply chain

  • Geopolitical tensions notably impacted LG Electronics' supply chain, particularly in connection to ongoing conflicts in the Middle East and the U.S.-China trade disputes. The company experienced heightened uncertainty in international markets following the U.S. tariff hikes, which led to an accelerated demand for imports and exacerbated supply constraints.

  • These external conditions contributed to surging logistics costs, which were one of the critical factors in the overall reduction of operating profit in Q3 2024. As LG navigated through these geopolitical challenges, the company emphasized its efforts to enhance supply chain management and strengthen business resilience in the face of ongoing external pressures. Such strategies are aimed at sustaining operational efficiency and protecting profit margins amidst a volatile market environment.

  • 4-3. Rising marketing and promotional expenditures

  • In addition to logistics and geopolitical factors, LG Electronics grappled with rising marketing and promotional expenditures, which contributed to the squeeze on profitability. The company's decision to increase marketing investments was contextualized as a strategic response to stimulate sales across various product lines, particularly in the home appliance and consumer electronics sectors, which are experiencing heightened competition.

  • While the focus on marketing was seen as necessary to fuel ongoing revenue growth—achieving a 10.7% increase in revenue compared to the previous year—the associated costs placed additional burdens on operating margins. The company projected that such promotional activities would be vital for sustaining the momentum of their growing sales channels, including new models in the consumer marketplace and subscription services, albeit at the expense of short-term profitability.

5. New Business Initiatives Underperforming

  • 5-1. Overview of LG’s Strategic New Ventures

  • LG Electronics has aimed to pivot its business model towards new growth avenues, focusing particularly on its Vehicle Solution (VS) and Business Solution (BS) divisions. These new ventures were intended to cater to emerging markets and align with global trends such as electrification and digital services. However, the operational effectiveness of these initiatives remained underwhelming as reflected in their third quarter performance.

  • Despite intentions to primarily target sectors like electric vehicles (EVs) and advanced commercial displays, the VS and BS divisions reported markedly diminished operational profits. In Q3 2024, the VS division, which previously showed promise with strong order backlogs, reported earnings of only 11 billion KRW, a sharp decline from 886 billion KRW in the same period the previous year. The anticipated growth in the vehicle solutions market has been hampered by cyclical downturns in EV demand.

  • 5-2. Muted Profitability Impact from Emerging Businesses

  • Although LG has introduced new product offerings, including medical monitors and EV chargers, the financial outcomes from these sectors have not met stakeholder expectations. The BS division's persistent investments in these new areas have resulted in a prolonged period of losses, signaling an acute struggle within the company’s attempt to foster profitable new business verticals.

  • Analysts have noted that while revenue in Q3 2024 grew by 10.7% year-on-year to 22.1764 trillion KRW, the operating profit declined by 20.9%, highlighting the significant cost pressures outweighing the revenue benefits from these new initiatives. As LG struggles to generate meaningful returns from its strategic pivots, emphasis has shifted towards scrutinizing the sustainability of these ventures.

  • 5-3. Challenges in Diversifying Beyond Flagship Portfolio

  • The underlying challenges associated with diversifying beyond LG’s flagship products can be attributed to several factors, including increased competition in the electronics market and a heavy reliance on the fortunes of core business lines, particularly smartphone components that cater to dominant players like Apple. LG's competitive positioning faced significant setbacks, as evidenced by the weak performance of its camera module business due to a lack of compelling sales for the new iPhone 16 series.

  • Furthermore, fluctuations in external market conditions—coupled with geopolitical tensions impacting international logistics—have compounded the difficulties faced by LG's new business segments. These factors have resulted in higher operational costs without a corresponding increase in profitability from emerging enterprises. The strategic intent to double BS division revenues to 10 trillion KRW has thus far been met with challenges, leading to persistent operational losses and casting doubt on the efficacy of these business strategies.

6. Strategic Outlook and Next Steps

  • 6-1. Roadmap for Long-Term Growth and Diversification

  • Looking ahead, LG Electronics has laid out a comprehensive roadmap aimed at fostering long-term growth and diversification. The company recognizes the need to broaden its portfolio beyond traditional strengths in consumer electronics and home appliances to include high-growth areas such as electric vehicle (EV) components and advanced digital services. With an eye on trends in sustainability and digital transformation, LG is set to ramp up investment in new technologies that align with consumer demands for eco-friendly solutions and smart technologies. Furthermore, next steps involve deepening collaborations with technology partners to enhance service offerings within the B2B segment, particularly in sectors such as health and smart energy solutions. As of 2025, LG’s leadership is optimistic that these strategic initiatives will not only drive revenue growth but also solidify the company’s reputation as a leader in innovation in the home appliance and electronics markets.

Conclusion

  • The financial results for Q3 2024 paint a multifaceted picture for LG Electronics, showcasing a commendable achievement in record revenues driven predominantly by the sustainability of its B2B and H&A segments, alongside pronounced challenges linked to cost management and underperforming new ventures. The decline in operating profit underscores the critical need for effectively controlling logistics expenses, which have disproportionately affected profitability. Additionally, the acceleration of subscription-based services and the development of EV components are pivotal pathways for LG to enhance its future income streams.

  • Looking into the future, LG Electronics must focus on integrating digital services and streamlining operations to ensure that margins can improve even amidst ongoing market volatility. The company's strategic pivot towards high-growth areas and innovative product offerings should be accompanied by a disciplined approach to capital returns, which will be essential for sustaining attractiveness to shareholders. As of 2025, LG's success in adapting to shifting market dynamics will not only reflect in its immediate financial metrics but also in its ability to reinforce its position as a leader in the electronics sector. The anticipation surrounding these enhancements presents an opportunity for LG to solidify long-term profitability and deepen market penetration in an evolving global economy.

Glossary

  • LG Electronics: A global leader in consumer electronics and home appliances based in South Korea. As of May 2025, LG Electronics is recognized for its significant revenue achievements and the strategic pivot towards electric vehicle components and digital services, while also managing profitability challenges.
  • Q3 2024: The third quarter of the fiscal year 2024, covering the period from July to September 2024. This quarter is highlighted by LG Electronics’ record revenue and declining profit margins, reflecting broader market trends affecting the electronics industry.
  • Revenue Growth: An increase in the sales revenue of a company over a specified period. In Q3 2024, LG Electronics reported a ₩22.1764 trillion revenue, marking a 10.7% increase year-on-year, showcasing successful strategies, predominantly in the B2B and Home Appliance sectors.
  • Operating Profit: The profit a company makes from its operations, excluding costs associated with non-operating factors. LG Electronics' operating profit declined by 20.9% to ₩7.519 trillion in Q3 2024, indicating challenges in maintaining profitability despite record revenues.
  • B2B (Business-to-Business): A segment of sales transactions between businesses rather than between a business and consumers. LG Electronics emphasized growth in its B2B operations, particularly in HVAC solutions, contributing significantly to its revenue in Q3 2024.
  • H&A (Home Appliance): Refers to LG’s Home Appliance and Air Solution division, responsible for a wide range of household devices. This division reported strong year-on-year performance with ₩8.3376 trillion in sales during Q3 2024, indicating robust demand despite market pressures.
  • Logistics Costs: Expenses associated with the transportation and storage of goods in the supply chain. LG Electronics faced rising logistics costs in Q3 2024, which significantly impacted its operating profit due to increased global shipping rates exacerbated by geopolitical tensions.
  • New Business: Innovative ventures undertaken by a company to explore new markets or product lines. LG's recent initiatives in subscription services and electric vehicle components show a strategic move to diversify, although they have yet to provide substantial returns.
  • Subscription Service: A business model where customers pay for the continued use of a product or service. As of Q3 2024, LG’s subscription revenue grew by over 50% to ₩1.3 trillion, reflecting a shift toward consumer preferences for flexible payment options.
  • Supply Chain: The entire system of production, processing, and distribution of goods from suppliers to consumers. LG Electronics is actively focusing on optimizing its supply chain amidst challenges posed by logistics costs and geopolitical factors affecting its operational efficiencies.
  • Geopolitical Headwinds: Challenges or obstacles resulting from political and economic conditions and conflicts between nations that affect global commerce. In Q3 2024, LG’s profitability was affected by geopolitical tensions, particularly in the Middle East and U.S.-China relations.
  • D2C (Direct-to-Consumer): A retail model where companies sell their products directly to consumers, cutting out intermediaries. LG's expansion into D2C models has been part of its strategy to reshape revenue streams amidst evolving market patterns.
  • EV (Electric Vehicle): Vehicles that are partially or fully powered by electricity. LG's strategic initiatives include expanding ventures related to EVs, which are crucial for its future growth and in response to market electrification trends.

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