LG Electronics said Monday it expects to post record-high first-quarter revenue, topping 22 trillion won for the first time, driven by growth in business-to-business operations and home appliance subscription services.
The South Korean tech giant estimated that its revenue for the January-March period increased 7.8 percent on-year to 22.74 trillion won ($15.5 billion), according to its earnings guidance, breaking 22 trillion won for the first time in any first quarter.
Despite its record revenue, the company’s operating profit dropped 5.7 percent from a year earlier to 1.25 trillion won in the first quarter.
LG’s result was largely in line with market expectations of 22.07 trillion won revenue and 1.26 trillion won operating profit projected by financial data firm FnGuide.
The company said it will release its full financial results end of this month, which includes net earnings and performance breakdowns by business division.
LG credited to best-ever Q1 revenue to stable growth in its core business, including home appliances, and in new sectors.
“Despite the continued uncertainty in the business environment, such as the economic downturn, we achieved stable growth in our existing core business, as well as qualitative growth in areas such as B2B, subscriptions, webOS-based services and direct-to-consumer business,” LG said in a statement.
Although segment-specific numbers were not disclosed, LG said it saw a significant improvement in its heating, ventilation and air conditioning division, a key part in LG's B2B sector. The unit's January-March result is expected to surpass last year’s Q1 performance of 2.59 trillion won in revenue and 335.6 billion won in operating profit, the company said.
LG has been aiming to expand its commercial HVAC business across Southeast Asia. The company recently supplied its high-efficient HVAC solution to a massive logistics center in Singapore.
The company has also ramped up efforts to supply large-scale cooling systems, called chillers, for AI data centers. LG Electronics CEO Cho Joo-wan recently met with Microsoft Chairman Satya Nadella during his visit in Seoul, where they agreed on supplying LG’s chillers to Microsoft’s data centers.
Meanwhile, LG’s flagship home appliance division also performed strongly, driven by growth in premium products, according to the firm.
The company also noted that LG’s expansion in subscription services attributed to sales growth. Last year, LG achieved a 2 trillion won revenue in its subscription service, making up about 20 percent of the company’s revenue. LG plans to introduce these subscription services to new markets this year, including India, Singapore and Hong Kong, in addition to its existing markets of Thailand, Malaysia and Taiwan.
By Ahn Sung-mi (sahn@heraldcorp.com)
