LG Electronics (066570) delivered an earnings surprise, with operating profit surpassing ₩1 trillion for the second consecutive quarter, allowing its first-half results to comfortably exceed its total annual profit from last year. Analysts attribute the improvement to the stabilization of high-margin structures in home appliance subscriptions and vehicle component solutions (VS), alongside the expansion of the B2B-focused Heating, Ventilation and Air Conditioning (HVAC) business. A one-time factor—a US tariff refund of approximately ₩300 billion—also boosted figures, causing second-quarter operating profit to surge 147% year-over-year.
On July 7, LG Electronics disclosed preliminary consolidated results for the second quarter of 2026, reporting revenue of ₩23.83 trillion and an operating profit of ₩1.58 trillion. These figures surpassed the market consensus of ₩22.79 trillion in revenue and ₩1.42 trillion in operating profit. Following the first quarter (revenue of ₩23.73 trillion, operating profit of ₩1.67 trillion), LG Electronics maintained an operating profit in the ₩1 trillion range for the second straight quarter. Cumulative first-half revenue reached ₩47.56 trillion (approximately $31.4 billion) with an operating profit of ₩3.25 trillion. Notably, the first-half operating profit has already exceeded the full-year 2025 operating profit of ₩2.48 trillion (approximately $1.6 billion), setting a new record for any half-year period.
The core driver behind this strong performance is the fundamental improvement of its main businesses. The Home Appliance & Air Solution (HS) division has established a “two-track strategy” targeting both the premium and volume markets, stabilizing its profit base through appliance subscriptions and expanded online sales channels. The Media Entertainment Solution (MS) division also showed signs of breaking away from a business structure historically sensitive to economic cycles, driven by growth in premium TVs like OLED Evo and Micro RGB, as well as advertising and content platform revenue based on its proprietary webOS operating system.
The Vehicle component Solutions (VS) business has now firmly established itself as a major profit center for LG Electronics. Based on partnerships with automakers, the automotive infotainment and electronic components business has secured a high order backlog. In particular, the expansion of sales for high-margin premium infotainment products has effectively created a new “cash cow” within the B2B sector. The HVAC (ES) business also emerged as a growth pillar, with sales of air conditioners, heat pumps, and unitary systems (commercial HVAC systems) surging, especially in Europe, which experienced a record-breaking heatwave.
The earnings surprise was also aided by a one-time factor: a US tariff refund of approximately ₩300 billion. LG Electronics reflected the confirmed refund amount for tariffs paid on goods exported to the US last year in this quarter’s results. However, the company emphasized the strengthening of its core business, stating, “Even excluding the tariff refund, second-quarter operating profit increased significantly compared to the previous year.” Yang Seung-soo, an analyst at Meritz Securities, also noted, “The solid core business is the key, more so than the tariff refund. Considering the expansion of high-margin infotainment sales in the home appliance subscription and vehicle component businesses, underlying profitability is being maintained robustly.”
Cost efficiency efforts also contributed to the structural improvement. Costs associated with voluntary retirement, which amounted to approximately ₩100 billion and ₩300 billion in the third and fourth quarters of last year, respectively, were reduced to a few hundred billion won level for the program implemented in April of this year. Under a company-wide emergency management system, cost reduction and inventory management combined to maximize the effect of profitability improvement.
Market attention is now shifting to LG Electronics’ next-generation growth engines. The AI data center cooling solution business is drawing particular interest. In the AI data center market, where a stable cooling system is as essential as high-performance semiconductors, LG Electronics’ HVAC technology is emerging as a new opportunity. Meritz Securities projected that LG Electronics’ cooling system for AI data centers is in the final stages of quality testing with a North American hyperscaler customer and could contribute to earnings within 6 to 9 months after a final contract is secured.
The robotics business is also considered a mid-to-long-term growth driver. Based on building a humanoid robot data platform, LG Electronics is expanding its portfolio of component solutions, such as robot actuators. An industry insider commented, “These results demonstrate that LG Electronics is not a company relying on one-off favorable factors, but is structurally transforming into an entity capable of generating over ₩1 trillion in operating profit on a sustainable basis.”
A somewhat conservative outlook coexists for the second half of the year. According to financial data provider FnGuide, the consensus for LG Electronics’ third-quarter and fourth-quarter revenue is ₩23.16 trillion (approximately $15.3 billion) and ₩24.59 trillion (approximately $16.2 billion), respectively, indicating continued growth. However, operating profit is projected to slow to ₩904.5 billion (approximately $597.2 million) in the third quarter and ₩303.8 billion (approximately $200.6 million) in the fourth quarter. Variables include the entry into a seasonal off-peak period, a slowdown in global consumer sentiment, and lingering uncertainty surrounding US tariff policy. Consequently, the key to defending second-half earnings is expected to be the growth trajectory of B2B and platform businesses such as VS, HVAC, and webOS.
Meanwhile, LG Electronics plans to disclose detailed performance by business division and its second-quarter consolidated net income at an investor briefing scheduled for later this month.