Release Date: January 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LG Electronics Inc (FRA:LGLG, Financial) achieved solid growth in sales and stable profit in 2024 despite internal and external challenges.
- The subscription and webOS businesses contributed significantly to offsetting rising expenses, enhancing business performance.
- The company maintained a healthy financial condition with a strong asset base and leverage ratios.
- The Home Entertainment business saw year-over-year sales growth, driven by higher sales in Europe and Asia and the expansion of webOS-based advertising.
- LG Electronics Inc (FRA:LGLG) was recognized for its ESG activities, achieving high scores in industry evaluations and maintaining inclusion in the Dow Jones Sustainability World Index for 13 consecutive years.
Negative Points
- LG Electronics Inc (FRA:LGLG) faced profitability challenges in Q4 2024 due to soaring logistics costs and fluctuating exchange rates.
- The Home Appliance business recorded an operating loss in Q4 2024, impacted by rising logistics costs and delayed demand recovery.
- The Vehicle Component Solutions business experienced a decline in operating profit due to higher investment in development and stagnant EV demand.
- The Information Display business faced revenue declines due to intensified competition and rising logistics and raw material costs.
- The company posted a net loss of KRW713.7 billion in Q4 2024, reflecting financial income and expense, equity method gain and loss, and other non-operating factors.
Q & A Highlights
Q: What are the potential risks from the Trump administration's tariff policies, and how will LG Electronics counter these risks?
A: The Trump administration has not yet detailed the tariffs, but high tariffs on countries with large US trade deficits, including Korea, are likely. LG Electronics will optimize its value chain and develop measures against various scenarios to mitigate potential consequences. This includes expanding swing production and shifting global production volumes to mitigate risks. (Chang Tae Kim, CFO)
Q: How do you foresee the trend in logistics costs evolving in 2025 for the home appliance business?
A: Logistics costs are expected to improve slightly in 2025 due to a reduction in sea transportation costs. Global shipping demand is projected to increase by 2.8%, while supply is expected to rise by 5.4%, leading to anticipated reductions in maritime freight rates in the second half of 2025. (I-Keuon Kim, HS Business Management Division)
Q: Can you provide an update on the Indian IPO and the plans for the capital raised?
A: LG Electronics filed a preliminary prospectus for the Indian IPO, with plans to sell up to a 15% stake in LGE India Limited. The final decision will depend on market receptivity. The capital raised will support corporate value and growth strategy, but details are still under review. (Unidentified Company Representative)
Q: What is the outlook for the webOS platform business in 2025?
A: The webOS platform saw solid growth in 2024, achieving KRW1 trillion in revenue. In 2025, LG Electronics will continue investing in content and expanding partnerships to enhance usability and diversify revenue streams, including entering new areas like gaming and commerce. (Unidentified Company Representative)
Q: How does LG Electronics plan to address the stagnant EV demand and the status of the LG Magna business?
A: Despite stagnant EV demand, LG Magna's Mexico plant started mass production in September 2023, with revenue contributions increasing each quarter in 2024. The contribution is expected to rise to 50% in 2025. LG Electronics will focus on winning more orders and diversifying its client base to stabilize profitability. (Unidentified Company Representative)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
