Climate Change Concerns Aid LG Electronics’ Q1 Numbers

  • 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 the previous 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.

LG Electronics Revenue by segment, Q1 2022 - Q1 2023

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 the electric 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 to economic downturn concerns, consumer electronics revenue is expected to fall 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 the automotive electronics 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.

Related reports


LG Electronics Operating Profit Stumbles in Q4 2022

  • 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 worsening macroeconomic conditions 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.

LG Q4 2022 Revenue_Counterpoint

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’s revenue 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 and significant concerns about 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. LG stated that it would continue to improve the competitiveness of its premium goods like OLED 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.

Related Posts

Varta Will Continue Leading Coin Cell Micro-Battery Market for Hearables

Global micro-battery market for true wireless hearables will grow 90% year-on-year. 

Coin cell batteries will grow to account for 57% of the market in 2020. 

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

January 22nd, 2020

Varta, a German battery manufacturer, has seen significant volatility in its share price over the last year. But according to the findings of Counterpoint Research’s recent report – “Global Micro-Battery Market for Hearables (TWS) 2019-2020”, the concern over Varta is likely misplaced and overlooks the recent surge in the true wireless hearables market, which is growing much faster than previously expected. Counterpoint expects that Varta’s sales volume will grow 57% year-on-year in 2020. The research also highlights that concerns over Varta’s temporary supply shortages will be solved and are not fundamental issues relating to Varta’s product or price competitiveness. Varta is also alleging that some Chinese companies are infringing its patents and it is initiating legal proceedings against those companies.

The size of the global market for true wireless hearables is estimated to have reached 120 million units in 2019, according to Counterpoint Research’s Hearables Market Forecast. It grew faster than expected in early 2019, ultimately more than doubling the 46 million units achieved in 2018. Accordingly, the related upstream supply chain has benefited from the boom, with micro-batteries being a key component.

Counterpoint Research forecasts that the micro-battery market will grow 90% in 2020. As the canal-type premium hearables such as AirPods Pro and Galaxy Buds are becoming ever more popular they will also influence the share among the different micro-battery types. Coin cell batteries will jump from around a quarter to well over half the micro-battery market, with Varta maintaining its leading position. Samsung SDI and LG Chem will also benefit from this rapid growth.

Cylindrical micro-batteries, that made-up 48% of the micro-battery market, will decline to represent less than a fifth of the much larger overall micro-battery market in 2020. LG Chem will likely remain the leading player of this battery type.

Pouch (polymer) micro-batteries, for low-end hearables, which are largely driven by small Chinese players, will continue to account for around a quarter of micro-battery sales.

Exhibit 1: Hearables – Micro-Battery* Market Share and Leading Players by Battery Type

Counterpoint Hearables - Micro-Battery Market Share and Leading Players by Battery Type

* Note: Micro-batteries for earbuds only (excluding batteries for charging cases)

Liz Lee, Senior Analyst at Counterpoint Research, said, “As demand for coin cell batteries exceeds the current supply, more battery companies will commercialize coin cell batteries and expand their capacity. However, as with all rechargeable lithium-ion batteries, there is a safety risk. Leading hearable manufacturers will be aware of the potential brand-damage arising from product failures and will select battery suppliers based on factors including quality. Thus, only a few companies with long-term track records of safety and reliability, are expected to benefit.”

“Global Micro-Battery Market for Hearables (TWS) 2019-2020” is available for purchase at Please feel free to reach out to us at for further questions regarding our latest research, insights or press inquiries.

Analyst Contacts:

Liz Lee

Counterpoint Research

How Competition is Driving Innovation in the EV Battery Market

Electric vehicle (EVs) have emerged as a focal point of realizing eco-friendly policies across the world. Increasingly, automobile OEMs recognize that the future of their products lies outside the ecosystem of internal commercial engines (ICE). As a result, they are tweaking their business models to be future ready.

For EVs, the most crucial component is the battery. No wonder then that competition is getting fiercer among global automobile OEMs and battery manufacturers to get a hegemony over the EV battery market. However, this competition is also yielding technological breakthroughs.

In the automotive paradigm, lithium-ion battery technology stands at the center of innovation. There has been a significant amount of progress in the improvement of lithium-ion battery technology. Here, we provide a brief overview of some of these developments and what the future holds.

NCM 811 just around the corner

Battery cell manufacturers are spending heavily on R&D for improving the energy density of lithium-ion batteries. Although the speed of improvements has been slow, gradually, lithium-ion batteries have helped increase the driving range of EVs by utilizing high-energy source materials and improving the per-unit cell size. There have been considerable efforts to boost the nickel portion of total cathode materials. Most of the top battery players have announced their plans for commercialization/mass production of NCM811 by 2019-2020. NCM811, which contains 80% nickel, 10% cobalt and 10% manganese, has a much longer lifespan and allows EVs to go further on a single charge. In April, CATL mentioned it had begun mass production of the NCM811. Recently AESC, acquired by Envision Group from Nissan, also announced its plan to produce NCM811, which promises more than 300Wh/Kg and 600-650Wh/L in 2020.

Solid-state batteries coming next

Battery companies have been introducing a roadmap for solid-state battery technology as the next-generation technology and exhibited various innovative products as well. In theory, solid-state batteries have a lower risk of electrolyte being exposed or exploding due to physical shock. This is because solid-state batteries adopt a solid electrolyte made of polymer or ceramic materials instead of the liquid electrolyte used in current lithium-ion batteries. Thanks to their high performance at elevated temperatures and high capacity, solid electrolytes are a technology that could further boost energy density. Interestingly, automobile OEMs seem to be taking a more proactive approach towards the R&D of the solid-state batteries. So far, Toyota ranks first in the number of patent applications for solid-state batteries. Last year, Volkswagen announced it would invest US$100 million in solid-state battery maker QuantumScape to mass produce the product by 2025.

Exhibit 1: Battery energy density & EV range on the rise

Battery energy density & EV range on the rise

Falling battery prices

The falling prices of battery cells and packs are also fueling the penetration of EVs. EV battery cell and pack prices were estimated to be US$140-US$150 per kWh and US$170-US$180 per kWh respectively, at the end of 2018. Thanks to economies of scale that battery cell makers will experience with energy density improvements, the price per kWh will keep falling further. By 2025, we predict EV battery cell and pack prices would fall below US$80 per kWh and US$100 per kWh respectively. This implies the cost will decline around 10% per annum. Consequently, the battery pack, which currently accounts for 30-40% of EV manufacturing costs, will make EVs cheaper than equivalent internal combustion engine (ICE) vehicles after 2025. With more countries moving to phase out ICE vehicles and more automobile OEMs rolling out EV fleets, the price drops should trigger explosive growth in EV demand. Ultimately, this will form a virtuous cycle.

The massive leap in the market size

According to Counterpoint Research’s Smart Automotive Research, passenger EVs will exceed 11 million units (including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs)), by 2025, and many steps in the new value chain are up for grabs. After 2025, EVs will be expected to cost the same or lower than conventional ICE vehicles, offering new opportunities for automobile OEMs and battery players. Not only is the EV market growing, but sales-weighted average battery capacity per EV is also on the rise. Accordingly, we expect the passenger EV(BEV/PHEV) battery pack market will expand to over 600 GWh by 2025 and generate nearly US$60 billion in revenue.

Ramping up production capacity

Leading battery manufacturers including CATL, Panasonic, LG Chem, Samsung SDI, and SK Innovation are fighting to win orders from global automobile OEMs. In doing so, they are also providing an excellent stimulus to each other. We do not see it as meaningful for battery vendors to line up order backlogs as long-term orders are generally flexible in terms of sales volume and price and depend on the market situation. Instead, it is essential to get a picture of ramp-up plans for the entire industry in order to track supply and demand movements going forward. Capacity expansions have accelerated sharply since the EV portion of global vehicle sales volume began to look significant. The cumulative capacity reached 129GWh at the end of 2018. We expect the cumulative battery production capacity for EVs to increase to nearly 800GWh by 2025, led mainly by the expansion of the top players.

No significant changes in the competitive landscape before 2025

Unlike other technology products, batteries are customized components. EV batteries, especially, need to be precisely optimized for each EV right from the product development stage to get optimum power and safety management. As the EV battery business requires a long history of competitiveness in such product development along with mass production experience, the industry has a high entry barrier. That is why we expect existing top players will continue to lead the market, and there will be no significant change in the competitive landscape for a while.

But, what about automobile OEMs who are willing to take battery cell technology and production into their own hands? At the initial stage, we believe that they will have to depend on long-term battery supply deals from multiple battery vendors. The long-term contracts will help to clear supply bottlenecks at a time of soaring demand and hold out the promise of cheaper batteries over time. Automakers will also have flexibility in supply for potential emergency scenarios and encourage competition among vendors to get better prices. In the meantime, they will attempt to internalize EV battery manufacturing based on the know-how and R&D accumulated through acquisitions or benchmarking a battery vendor in an exclusive partnership. When the time comes for the market focus to shift from the current lithium-ion batteries to solid-state batteries after 2025, the industry could look very different.

Exhibit 2: Global EV battery suppliers and auto OEMs

Global EV battery suppliers and auto OEMs

You can click here to download the full report on “How Competition is Driving Innovation in the EV Battery Market” from our Research portal.

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