Highest First-Quarter Operating Income Margin in Company History

SEOUL, Apr. 29, 2020 — LG Electronics Inc. (LG) today announced first-quarter 2020 consolidated revenue of KRW 14.73 trillion (USD 12.45 billion) and operating profit of KRW 1.09 trillion (USD 921.47 million). Although revenue declined modestly compared with the same period last year, operating income improved 21.1 percent from the 2019 quarter making this only the second time in history when quarterly operating profit exceeded KRW 1 trillion. The 7.4 percent operating margin was the highest in LG’s history for a first quarter.

The LG Home Appliance & Air Solution Company reported first-quarter revenues of KRW 5.42 trillion (USD 4.58 billion) and operating profit of KRW 753.5 billion (USD 636.8 million). Revenues were virtually unchanged from the first quarter last year, the effect of softer global demand during the pandemic offset by higher sales in Korea of steam appliances such as washers, dryers, dishwashers and the LG Styler clothing care system, reflecting consumer interest in health and hygiene. Operating profit (3.6 percent higher than the same period last year) and operating margin were the highest in LG’s history, benefitting from cost-reduction efforts and increased interest in premium products.

The LG Home Entertainment Company posted first-quarter revenues of KRW 2.97 trillion (USD 2.51 billion), a decrease of 4.8 percent from the same period last year as a result of component supply constraints and slowing global demand due to lower consumer confidence. Taking into account the reclassification of information technology products from the Home Entertainment Company to the Business Solutions Company this year, operating income of KRW 325.8 billion (USD 275.32 million) increased 31.7 percent from the same period last year as a result of operating efficiencies and expansion of premium products such as OLED TVs and NanoCell TVs. With market demand affected negatively by the pandemic, the company is adjusting the proportion of premium products, expanding online sales, optimizing resource input and streamlining asset management to improve profitability going forward.

The LG Mobile Communications Company reported first-quarter sales of KRW 998.6 billion (USD 843.9 million), narrowing its operating loss to KRW 237.8 billion (USD 200.96 million) from the previous quarter. Sales decreased nearly 34 percent from last year’s first quarter, primarily due to supply disruptions from Chinese partners. Costs were further reigned in through production and marketing efficiencies, ongoing efforts to help buffer the effect of the pandemic. The new LG Velvet 5G smartphone launch in Korea during the second quarter will mark a new direction with a different design philosophy, competitive yet value-conscious components and enhanced online sales initiatives.

The LG Vehicle Component Solutions Company recorded first-quarter revenues of KRW 1.32 trillion (USD 1.11 billion), a 2.1 percent decline from the same period last year with an operating loss of KRW 96.8 billion (USD 81.8 million) as a result of the business disruption of North American and European automakers. To minimize ongoing pandemic risk the company will accelerate its supply chain optimization efforts taking into consideration a reduction in demand from automakers and continue to improve its business structure with further cost savings in the second quarter.

The LG Business Solutions Company generated first-quarter sales of KRW 1.71 trillion (USD 1.44 billion), an increase of 3.5 percent year-on-year and 18.8 percent higher than the previous quarter thanks to increased sales of solar modules and IT products such as LG gram notebooks. Operating profit of KRW 212.2 billion (USD 179.3 million) marked 26.3 percent higher than the same period the year earlier and 159 percent higher than the previous quarter due to increased solar module sales, stable profitability from information displays and innovations in productivity. To help minimize further pandemic disruptions, the company is expanding online sales efforts for IT product to capture a greater share of the telecommuting and distance-learning markets.

2020 1Q Exchange Rates Explained

LG Electronics’ unaudited quarterly earnings results are based on IFRS (International Financial Reporting Standards) for the three-month period ending March 31, 2020. Amounts in Korean won (KRW) are translated into U.S. dollars (USD) at the average rate of the three-month period of the corresponding quarter — KRW 1,183.33 per USD.

Earnings Conference and Conference Call

LG Electronics will hold an English language conference call on April 29, 2020 at 21:00 Korea Standard Time (12:00 GMT/UTC). Participants for the English conference call are instructed to call +82 31 810 3130 and enter the passcode 6418#. The corresponding presentation file will be available for download at the LG Electronics website (www.lg.com/global/ir/reports/earning-release.jsp) at approximately 16:00 on April 29, 2020. Visit http://pin.teletogether.com/eng and pre-register with the passcode provided. For those unable to participate, an audio recording of the news conference will be available for a period of 30 days after the conclusion of the call. To access the recording, dial +82 31 931 3100 and enter the passcode 142980# when prompted.

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