LG Electronics said Friday its operating earnings for the fourth quarter dipped more than 90 percent from a year earlier on slumping demand for home appliances coupled with global economic difficulties.
The consumer electronics giant reported an operating profit of 69.3 billion won ($56.1 million) for the October-December period, down 90.7 percent from the same period a year prior, the regulatory filing showed.
It was the first time South Korea’s No. 2 home appliances maker had reported a quarterly operating income of less than 100 billion won since it logged 75.7 billion won in profit for the fourth quarter of 2018.
The company also logged a net loss of 212.4 billion won for the fourth quarter, down from a profit of 21.3 billion won a year before. However, it reported record high quarterly sales of 21.85 trillion won, up 5.2 percent from the previous year.
LG attributed the sluggish quarterly performance to a high base effect from the pent-up consumer demand for home appliances during the pandemic.
For the full year of 2022, LG posted 3.55 trillion won in operating profit, compared with the last year’s 4.05 trillion won. Meanwhile, it logged a record high in sales in 2022, surpassing 80 trillion won for the first time in its history, the regulatory filing showed.
Its annual sales from last year reached nearly 83.47 trillion won, up 12.9 percent from the previous year. After topping 70 trillion won in full-year sales for the first time in 2021, the company set a new all-time high in the following year.
The consumer electronics giant's main home appliance business and promising vehicle component business drove the gains.
Last year’s sales from its vehicle component solutions division accounted for more than 10 percent of sales. After its establishment in 2013, the division recorded a profit for the first time with an operating income of 169.6 billion won last year.
While the business environment is expected to be unfavorable this year, LG plans to focus on finding additional growth engines through premium strategies and expansion of high value-added and high-profit orders, the officials said.
During the earnings call on the same day, an LG official said the company was expecting the decline in disposable income and the recovery of consumer sentiment to take a considerable time.
"We'll continue to strengthen our competitiveness of premium products and overcome the impact of reduced demand by expanding products in the volume zone that we have prepared," the official said.
"We will maintain a business structure that can continuously secure profitability by maximizing the effect of cuts and reducing costs through emergency management."
LG shares ended trading at 98,100 won on the same day, up 0.2 percent from the previous session's close.