What Happened? H1 2025 Performance Overview

LG Electronics reported a 1.6% year-on-year increase in revenue to KRW 434.75 trillion in H1 2025. However, operating profit declined by 25% to KRW 18.985 trillion, falling short of market expectations. The Q2 2025 preliminary earnings further highlighted this challenging trend.

Why These Results? Key Drivers of Performance

The decline in operating profit is primarily attributed to the weak performance of the Media entertainment Solution (MS) division and increased investments in the Vehicle Solution (VS) division. External factors such as the global economic slowdown, rising raw material prices, and volatile exchange rates also played a significant role.

  • MS Division: Increased competition in the OLED TV market impacted profitability.
  • VS Division: Investments in future growth initiatives weighed on short-term earnings.
  • External Factors: Rising raw material prices and exchange rate fluctuations added pressure on margins.

What’s Next? Outlook and Investment Strategy

LG Electronics continues to invest in future growth drivers like robotics, automotive components, and smart home solutions. However, short-term profitability improvements are expected to be challenging. Investors should consider the following:

  • Short-term perspective: Monitor the MS division’s performance, the return on VS investments, and the overall macroeconomic environment.
  • Long-term perspective: The success of these future growth investments and the company’s ability to regain competitiveness in core businesses will determine long-term value.

Investor Action Plan

A cautious approach is recommended in the short term, with careful monitoring of market conditions and prudent investment decisions. For a long-term perspective, investment strategies should consider the growth potential of LG’s future-oriented businesses.