LG Electronics Inc. (LG) the manufacturer of the LG brand of products that are popular in Kenya and all around the world, has reported record-breaking annual revenue for 2023, reaching KRW 84.2 trillion (Kshs. 10.1t), with a solid operating profit of KRW 3.55 trillion (Kshs. 427.2b). This marks the third consecutive year of record revenue and operating profits.
The positive revenues were achieved despite challenging external factors such as an economic slowdown. LG’s core business of home appliances, and the burgeoning vehicle components business, have demonstrated remarkable resilience, maintaining continuous growth for eight consecutive years. The combined revenue of these businesses exceeded KRW 40 trillion (Kshs. 4.8t) last year, a substantial increase from KRW 18 trillion (Kshs. 2.2t) in 2015. The proportion of these two businesses in the total revenue has also risen, from 32.5 percent to 47.8 percent, over a similar period.
The impressive performance is attributed to LG’s strategic efforts to enhance its business portfolio. The company successfully expanded its B2B business by identifying market turning points early on and integrated new business models, including subscription services, into existing frameworks. In Kenya, for example, the company has been working with its distribution partners to set up fully-operational laundromats at their outlets, as showcases for investors wishing to go into the laundromat business. Furthermore, LG’s innovative content and service business model, leveraging its extensive user base of hundreds of millions of products globally, has also contributed to robust profitability.
Looking ahead, LG is committed to a continual transformation from a mature business-oriented structure to a future growth-oriented one. In 2024, the company will concentrate its capabilities on breaking through limits to maximize its business potential. Guided by the newly established Overseas Sales & Marketing Company, LG is eyeing additional growth and expanded product coverage, particularly in emerging markets, where greater growth opportunities are predicted.
The LG Home Appliance & Air Solution Company achieved an annual revenue of KRW 30.14 trillion (Kshs. 4.6t), marking eight consecutive years of growth. Introducing new business models including subscription services and expanding the B2B share in areas such as HVAC, components and built-in solutions contributed to this growth. The operating profit recorded an increase of over 76 percent compared to the previous year, reaching KRW 2.08 trillion (Kshs. 250b).
In 2024, the Company will accelerate a shift in its business model towards future readiness, including Direct-to-Consumer initiatives. It aims to expand the deployment of home appliance operating systems and extend subscription services to international markets. Additionally, there will be a swift progression in building smart home solutions that reflect the value of “Zero Labor Home.” In terms of products, the Company will seek to maintain its strategic approach of solidifying the premium leadership of key products, such as washing machines and refrigerators, while swiftly expanding region-specific lineups. To sustain continuous growth in the B2B sector, especially in areas like HVAC, the Company plans to strengthen its capabilities by establishing a complete, local business operation that encompasses product development, production, and sales, with a focus on the evident electrification trends in regions such as North America and Europe.
The LG Vehicle Component Solutions Company achieved an annual revenue of KRW 10.1 trillion (Kshs. 1.2t) and an operating profit of KRW 133 billion (KSHS. 16b). Now in its 10th year, the Company is in its eighth consecutive year of growth since it began disclosing performance results in 2015. Its share of the total consolidated revenue has also increased to 12 percent. In 2024, the Company aims to drive both external growth, leveraging a substantial order backlog, and qualitative growth in its operations. In in-vehicle infotainment, the Company is dedicating efforts to secure capabilities in the area of software-defined vehicles in response to the needs of OEMs. Drawing upon differentiated technology accumulated in the home appliance and IT sectors, the Vehicle Component Solutions Company will seek to further enhance the in-vehicle customer experience. In the e-Powertrain area, the Company will focus on strengthening product capabilities and early stabilization of overseas production bases to enhance responsiveness to customer demands. Additionally, in headlamps, there are plans to expand premium product orders while simultaneously improving operational efficiency.
The LG Home Entertainment Company recorded an annual revenue of KRW 14.2 trillion (Kshs. 1.7t), and an operating profit of KRW 362 billion (Kshs. 43b). The webOS platform-based content and services business solidified its position as a new source of revenue, showing a significant increase in operating profit compared to the previous year. The revenue slightly decreased amid a relatively slow recovery in demand for premium products like OLED TVs. In anticipation of a progressive recovery in TV demand in 2024, the Company will seek to strengthen both the top-tier OLED lineup and the QNED lineup, following a dual-track strategy to lead the premium market. Simultaneously, the Company is accelerating its transformation into a media and entertainment powerhouse. In the current year, the webOS platform business will be nurtured as a significant revenue-generating venture in the scale of trillions.
The LG Business Solutions Company recorded an annual revenue of KRW 5.4 trillion (Kshs. 650b) and, unfortunately, suffered an operating loss of KRW 42 billion (Kshs. 5b). The revenue saw a slight decrease compared to the previous year due to delays in IT demand recovery and reduced investments from key enterprises. Increased investments in future growth areas such as robotics and electric vehicle charging had an impact on profitability. In 2024, the Company is positioning itself with a competitive lineup of IT products, including gaming monitors and the LG Gram Pro, and will actively seek to find business opportunities targeting distinct verticals such as government agencies and schools. As a leader in LG’s B2B business, it aims to accelerate the shift from supplying single products to integrating and providing adjacent solutions. With a significant proportion of new businesses within the organization, investments will be prioritized for future preparations rather than short-term management performance.