LG Chairman Koo Kwang-mo (right) and Nvidia founder and CEO Jensen Huang pose with a miniature LG humanoid robot bearing their signatures at Nvidia’s headquarters in Santa Clara, California, on Nov. 13, local time. LG
LG Group’s “selection and focus” strategy, pursued steadily since Chairman Kwang-mo Koo took the helm, is translating into visible earnings gains. Analysts say the group has strengthened its earnings fundamentals by shifting its portfolio from consumer-facing businesses toward higher-margin business-to-business segments such as heating, ventilation and air conditioning (HVAC), vehicle solutions and robotics, while cementing a “One LG” framework that pools capabilities across major affiliates.
The results of that restructuring are already evident at LG Electronics (066570). The company posted second-quarter consolidated revenue of 23.83 trillion won ($16.4 billion) and operating profit of 1.58 trillion won, up about 15% and 147% from a year earlier, respectively. Both were the highest ever for a second quarter.
Cumulative first-half operating profit alone exceeded 3 trillion won, already surpassing the full-year figure for last year. The third-quarter outlook is also bright. According to brokerage consensus estimates, LG Electronics is projected to report third-quarter revenue of 24.52 trillion won and operating profit of 1.12 trillion won, up 12.1% and 62.7% from a year earlier, respectively.
The main engine behind the recent earnings momentum is the HVAC business, as the global spread of artificial intelligence data centers drives surging demand for high-efficiency cooling systems. Last month, LG Electronics became the first South Korean company to win quality certification from Nvidia for a 600-kilowatt liquid cooling distribution unit (CDU) for data centers, strengthening its position in the B2B market.
LG Corp. (003550) is also moving quickly in physical AI, or intelligent robotics, which it sees as a future growth driver. On the 13th, Koo visited Nvidia’s headquarters in Santa Clara, California, and met Nvidia CEO Jensen Huang to flesh out plans for joint work on AI infrastructure and robotics. The two companies plan to jointly develop a next-generation humanoid robot and unveil it sometime next year. The vehicle solutions business, which has drawn steady investment since its launch in 2013, is also serving as a mainstay for margin defense as it wins more orders for high-value components such as in-vehicle infotainment systems.
The “One LG” synergy among affiliates aimed at expanding the new-business ecosystem is now firmly on track. Targeting core future industries including AI data centers, smart factories and mobility, the group is completing a structure in which the capabilities of LG Electronics (cooling equipment and hardware), LG Energy Solution (373220) (batteries and energy storage systems) and LG CNS (064400) (AI solutions and IT systems integration) mesh like gears.
Major affiliates are keeping pace with solid performances. Even amid the chasm, or temporary slowdown, in electric vehicle demand, LG Energy Solution is expected to post third-quarter revenue of 8.92 trillion won, a 56.5% increase from a year earlier. Operating profit is projected to fall 54.3% to 274.9 billion won on short-term fixed-cost burdens, but the company is laying the groundwork for a rebound by responding nimbly to rising demand for energy storage systems from AI data centers.
LG CNS, which leads the group’s AI transformation, is estimated to report third-quarter revenue of 1.61 trillion won, up 5.5% from a year earlier, and operating profit of 138.2 billion won, up 15%. Riding growing corporate demand for AI adoption, it is aggressively expanding its B2B footprint in finance, the public sector and manufacturing on the strength of its cloud and data capabilities.
An industry official said Koo’s management philosophy of investing boldly in future growth with a long-term view, together with the “One LG” synergy spanning affiliates, is being proven in clear numbers. “Results from new businesses that were carefully selected and focused on — vehicle solutions, HVAC and physical AI — are getting on track, and a group-wide value-up is beginning in earnest,” the official said.