LG Faces Q2 Headwinds Amidst Strategic Shifts

LG Electronics reports mixed Q2 2025 results. Revenue and profit dropped year-over-year due to market softness, but B2B sectors and non-hardware businesses showed strong growth, signaling a strategic shift.

LG Electronics Navigates Challenging Q2 2025

LG Electronics has announced its financial results for the second quarter of 2025, reporting consolidated revenue of KRW 20.74 trillion and an operating profit of KRW 639.4 billion. These figures represent a year-over-year decline in both revenue and operating profit, attributed primarily to a persistently soft global market, increased tariff burdens stemming from changes in U.S. trade policy, and heightened competition across various sectors. Furthermore, rising operational costs, including logistics expenses, contributed to a reduction in overall profitability compared to the same period last year.

Despite these prevailing challenges, several of LG’s key business units demonstrated robust performance. The Home Appliance Solution (HS), Vehicle Solution (VS), and Eco Solution (ES) Companies each recorded year-over-year increases in both revenue and operating profit. Notably, all three divisions achieved their highest-ever second-quarter results, with the VS Company specifically reaching its best quarterly revenue and operating profit in its history. This contrasts with the Media Entertainment Solution (MS) Company, which reported an operating loss due to lower TV sales and increased marketing expenditures; however, its webOS platform-based advertising and content business continued to generate stable profits.

Strategic Rebalancing Towards Long-Term Growth

LG is actively strengthening its foundational business segments by prioritizing B2B operations, including vehicle components and HVAC systems. The company is also focusing on non-hardware businesses, such as subscription services and its webOS platform, which offer recurring revenue streams and higher margins. Additionally, a push towards direct-to-consumer (D2C) operations via its online platform, LGE.COM, aims to enhance profitability and bolster brand equity. These strategic shifts are central to LG’s ongoing portfolio transformation.

In the second quarter of 2025, B2B revenue, encompassing vehicle, component, smart factory solutions, and HVAC, grew by 3 percent year-over-year, reaching KRW 6.2 trillion. The home appliance subscription business also saw significant expansion, with revenue increasing by 18 percent to KRW 630 billion. These segments are less vulnerable to demand volatility and benefit from robust entry barriers due to their solution-based customer relationships, providing a more stable revenue base for LG’s future.

Segment Performance and Future Outlook

The Home Appliance Solution (HS) Company achieved its best-ever second quarter with KRW 6.59 trillion in revenue and KRW 439.9 billion in operating profit, maintaining strong global competitiveness through its dual-track strategy targeting both premium and mass markets. This unit plans to expand its subscription and D2C businesses while implementing cost improvements to mitigate U.S. tariff impacts. The Media Entertainment Solution (MS) Company reported KRW 4.39 trillion in revenue but incurred an operating loss of KRW 191.7 billion due to soft TV demand and increased marketing. It aims to enhance operational efficiency, expand into Global South markets like India, and grow its webOS platform with new content.

The Vehicle Solution (VS) Company posted record revenue of KRW 2.85 trillion and operating profit of KRW 126.2 billion, driven by a strong order backlog and increased OEM vehicle sales, particularly in Europe. This unit’s strategic shift toward premium in-vehicle infotainment (IVI) systems and efficiency improvements in EV components contributed to its strong profitability. The Eco Solution (ES) Company also achieved a record second quarter with KRW 2.64 trillion in revenue and KRW 250.5 billion in operating profit, fueled by strong demand for residential air conditioners and growth in commercial HVAC. It intends to explore new opportunities in emerging sectors like AI data centers by enhancing its commercial HVAC and industrial chiller capabilities.

LG’s Evolution in Automotive

While the article highlights LG’s strong performance in its Vehicle Solution (VS) Company, it’s worth noting the broader context of LG’s push into the automotive sector. LG has been strategically positioning itself as a significant player in automotive components for several years. This includes not only its in-vehicle infotainment systems, but also electric vehicle (EV) powertrains, battery components, and lighting solutions. The company has formed key partnerships with major global automakers and suppliers, demonstrating a commitment to becoming a leading tier-one supplier. This long-term investment in a high-growth, technology-intensive sector like automotive components underscores LG’s strategy to diversify its revenue streams beyond traditional consumer electronics and leverage its expertise in electronics and software for new applications.