2Q sales of KRW 1.5208 trillion
Impact of strategic investment and some contract deferral
Data Center DBO orders exceeding KRW 1 trillion
Interim dividends are also being considered
ėŽė§ íë View of LG CNS headquarters located in Magok, Gangseo-gu, Seoul. LG CNS
LG CNS continued its sales growth in the second quarter thanks to the growth of artificial intelligence (AI), cloud, and financial businesses. However, operating profit fell from last year due to increased investment for future growth projects and delayed contracts for some projects. LG CNS expects its performance to improve from the second half of the year due to the reflection of sales of deferred businesses and the expansion of AI data centers and next-generation financial businesses.
LG CNS announced on the 31st that it recorded KRW 1.5208 trillion in sales and KRW 127.9 billion in operating profit in the second quarter on a consolidated basis through a provisional performance disclosure. Sales increased 4.2% from the same period last year, but operating profit fell 9.2%. Compared to the previous quarter, sales increased 15.7%, and operating profit increased 35.8%.
The cumulative sales in the first half of the year were KRW 2.8358 trillion, up 6.1% from the same period last year. Operating profit rose 1.1 percent to 222.1 billion won.
LG CNS cited strategic investments and delays in some project contracts in the background of a decline in operating profit in the second quarter. “It is not a structural problem caused by weakening business competitiveness, but a preemptive investment for future growth and a temporary impact on project schedules,” said Song Kwang-ryun, chief financial officer of LG CNS. “The delayed project is currently being pursued normally and will contribute to improving performance in the second half of the year.”
Sales in the second quarter of the AI and cloud sectors, which are core businesses, were 906 billion won, up 3.9% from the same period last year. Sales in the first half of the year increased 5.1 percent to 1.6714 trillion won, accounting for 59 percent of the total sales. The performance was driven by the expansion of AI platform and data construction business, the growth of cloud management services (MSP), and demand for AI infrastructure construction and maintenance including graphics processing units (GPU).
The AI data center business is also expanding. LG CNS is carrying out the design, construction, and operation (DBO) business of hyperscale-class data centers such as Samsong and Jukjeon. New DBO orders in the first half of the year exceeded KRW 1 trillion. Recently, it launched ‘XPU Works’ that provides AI computational resources such as GPUs and NPUs in a subscription type.
LG CNS also maintains the existing principle of shareholder return, which distributes more than 40% of its net income on a consolidated basis. We will continue to push for shareholder returns based on stable financial structure and cash generation power, CFO Song said. “We are considering implementing interim dividends this year following last year.”