KOSPIElectronic Components066570

LG Electronics

₩216,000▲ 2.13%2026-10-02 close

Market Cap

₩35.2T

Turnover

₩83.6B

Volume

390,000 shares

Shares out.

160M

PER

34.8×

PBR

1.2×

EPS

₩5,792

Dividend Yield

0.67%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,350 per share · Prices as of the 2026-10-02 close

Report overview

From Appliances to AI Infrastructure: Testing Earnings Power

In the first half of 2026, recovering profitability at the auto components and TV units combined with a one-off tariff refund lifted half-year operating profit above the entire 2025 full-year figure; attention now shifts to how fast AI data center cooling orders convert into revenue and whether memory and copper cost pressure can be offset.

1
Operating profit was KRW 1.674tn in 1Q26 and KRW 1.579tn in 2Q26, so the two quarters combined far exceeded the KRW 2.478tn recorded for the whole of 2025.
2
2Q26 results included both April voluntary-retirement costs and a US tariff refund, so by the company's own account a net one-off gain contributed to the reported profit.
3
AI data center cooling orders exceeded KRW 600bn in the first half, and management set a target of trillion-won-scale project orders by year-end.
4
The Home Appliance Solution unit topped KRW 7tn in quarterly revenue for the first time, while Vehicle Solution kept revenue above KRW 3tn with a margin over 6% for two consecutive quarters.
5
Raw material prices such as memory and copper, logistics costs and tariffs remain live variables into the second half, and the company posted an operating loss of KRW 109bn in 4Q25.

Business structure

LG Electronics runs four divisions - Home Appliance Solution (HS), Media Entertainment Solution (MS), Vehicle Solution (VS) and Eco Solution (ES) - plus consolidated subsidiary LG Innotek. In 2Q26, HS revenue was KRW 7.076tn, MS KRW 5.115tn and ES KRW 2.726tn.

VS, the auto components unit, posted revenue of KRW 3.026tn and operating profit of KRW 191.2bn, both second-quarter records, with revenue above KRW 3tn for two straight quarters and a margin above 6%.

HS crossed KRW 7tn in quarterly revenue for the first time, with an operating margin close to 10% for a second consecutive quarter.

MS, which covers TVs and monitors, turned to an operating profit of KRW 219.4bn from a KRW 191.7bn loss a year earlier, helped by a richer premium mix, cost cuts and webOS platform revenue. ES reported KRW 2.726tn in revenue and KRW 235.8bn in operating profit for an 8.6% margin.

B2B revenue reached KRW 6.5tn, up 5% year on year and equal to 36% of company revenue excluding LG Innotek, while subscription revenue grew 5% to KRW 660bn.

The company describes its direction as combining premium appliances, the webOS media platform, vehicle components and HVAC and energy solutions into a hardware-plus-solutions structure.

Competitively it faces global set makers and Chinese brands in appliances and TVs, and specialized overseas HVAC vendors in air conditioning and data center cooling. Management framed data center cooling as a business where orders can scale quickly and robotics as a longer-term growth engine aimed at 2030.

Earnings trend

Quarterly revenue · Operating profit

₩20.7T₩639.4B25Q2₩21.9T₩688.9B25Q3₩23.9T-₩109B25Q4₩23.7T₩1.7T26Q1₩23.8T₩1.6T26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩83.5T₩3.6T2022₩84.2T₩3.5T2023₩87.7T₩3.4T2024₩89.2T₩2.5T2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩20.7T	₩639.4B	3.1%
2025Q3	₩21.9T	₩688.9B	3.1%
2025Q4	₩23.9T	-₩109B	−0.5%
2026Q1	₩23.7T	₩1.7T	7.1%
2026Q2	₩23.8T	₩1.6T	6.6%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩83.5T	₩3.6T	₩1.2T	4.3%	6.3%	145.2%
2023	₩84.2T	₩3.5T	₩712.9B	4.2%	3.6%	156.4%
2024	₩87.7T	₩3.4T	₩367.5B	3.9%	1.8%	160.3%
2025	₩89.2T	₩2.5T	₩960.6B	2.8%	4.0%	140.3%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis revenue rose steadily from KRW 83.467tn in 2022 to KRW 84.228tn in 2023, KRW 87.728tn in 2024 and KRW 89.201tn in 2025, while operating profit went from KRW 3.551tn in 2022 and KRW 3.549tn in 2023 to KRW 3.420tn in 2024 before falling to KRW 2.478tn in 2025.

The operating margin narrowed from 4.3% to 2.8% over the same span, a stretch in which revenue growth did not translate into profit growth.

Net profit attributable to owners nevertheless improved to KRW 960.6bn in 2025 from KRW 367.5bn in 2024, operating cash flow rose to KRW 4.281tn from KRW 3.843tn, and the debt-to-equity ratio improved from 160.3% to 140.3%.

Quarterly, operating profit of KRW 639.4bn in 2Q25 and KRW 688.9bn in 3Q25 gave way to a KRW 109.0bn operating loss and a KRW 828.2bn net loss attributable to owners in 4Q25.

Profitability then jumped to KRW 1.674tn in 1Q26 and KRW 1.579tn in 2Q26, two consecutive quarters above KRW 1.5tn, lifting the half-year total above the full 2025 operating profit.

For the second quarter the company said home appliances kept growing despite an unfavorable external environment including Middle East conflict, that sporting-event effects and vehicle solution growth added to revenue, and that a richer high-value mix, cost competitiveness efforts and emergency management measures aided profitability.

It also noted that April voluntary-retirement costs were booked and that part of the tariffs paid on last year's US-bound shipments was refunded and recognized as one-off income.

According to coverage of the July 30, 2026 conference call, management said the quarter included roughly KRW 300bn of net one-off gains, including the tariff refund.

Net profit attributable to owners was KRW 815.7bn in 1Q26 and KRW 668.0bn in 2Q26, a milder improvement than at the operating line, which argues for also watching non-operating items such as financial and tax effects.

Industry analysis

End-demand for consumer goods remains heavy. For the third quarter the company said it expects a period of short-term demand stagnation in home appliances and will focus on the relatively resilient Global South. On the cost side, rising component and raw material prices are a shared burden across set makers.

In 1Q26 the MS division's purchases of display-device semiconductors rose 19.4% year on year to KRW 238.3bn, their share of raw material costs widened from 7.7% to 9.1%, and their average price rose 33.1%.

Average copper prices also rose 21.1% year on year in the first quarter, lifting the ES division's copper purchases from KRW 82.4bn to KRW 156.5bn and their share of raw material purchases from 38% to 53.3%. Demand tied to AI infrastructure, by contrast, is expanding quickly.

On its first-quarter call the company said its internal review put the addressable market for data center chillers at USD 1.6bn in 2026, growing to about USD 12.7bn by 2030.

A company official said global annual new data center IT capacity should rise from 25GW in 2026 to 70GW in 2031 with more than 60% built in North America, and that it will widen contact with North American hyperscalers and colocation operators.

Competitively, it has obtained Nvidia quality certification for a 600kW-class CDU and is pursuing certification for additional models and cooling products, which it presents as its entry basis in a market long led by overseas HVAC specialists.

Standard chillers require about six months of lead time and customized equipment for large data centers about nine months, so there is a gap between order intake and revenue recognition.

Outlook

The company has not issued fresh numerical guidance. According to coverage of the July 30, 2026 conference call, management gave no formal numeric guidance update but said it expects a significant year-on-year improvement in profitability and a meaningful level of annual operating profit.

CFO Kim Chang-tae said first-half AI data center cooling orders had already exceeded KRW 600bn and were in production, with a target of trillion-won-scale project orders by year-end.

Capacity at home and abroad is to be expanded in stages to meet order growth, but the specific scale, timing and location of the investment have not been disclosed.

In robotics, a new organization has been set up and initial actuator production at the Changwon pilot line is complete ahead of external order activity in the second half, while cooperation with Nvidia is taking shape around robots, AI factories and mobility, iM Securities reported in an August 13, 2026 note.

For TVs, the company targets a large year-on-year earnings improvement and a full-year profit despite higher memory and other input costs in the second half, responding through strategic inventory, specification optimization and price management.

In vehicle components, the company said its Hungarian entity will start mass production at the end of 2026 and run at full scale in 2027, with additional new projects in preparation.

Shareholder returns are set at a combined KRW 200bn across 2026 and 2027, with KRW 100bn of buybacks and cancellation this year followed by another KRW 100bn next year.

The dividend policy covers FY2024 to FY2026 and calls for returning at least 25% of consolidated net profit attributable to owners excluding one-off items, a minimum annual KRW 1,000 per common share, and semiannual dividends.

Valuation

PER

34.8×

PBR

1.2×

ROE

4.3%

EPS

₩5,792

BPS

₩164,463

Dividend per share

₩1,350

One caveat for earnings-based multiples is that the four-quarter window used in the calculation (3Q25 through 2Q26) still contains the large loss booked in 4Q25.

That means the earnings-based multiple screens higher than the quarterly profit power demonstrated in the first half of 2026, and once the loss-making quarter rolls out of the window the multiple will change even at an unchanged share price.

The stock trades at a premium to book value, and it is worth noting that per-share net asset figures differ depending on whether non-controlling interests are included, so data providers display different computed multiples.

Dividends are now on an established semiannual cadence, though the yield itself sits toward the lower end compared with Korea's high-dividend cohort.

Market views diverge - iM Securities in an August 13, 2026 note raised its target price to KRW 250,000 from KRW 165,000 and said that after a decade of being assessed as an IT durable tied to macro variables, the shares are now differentiating from other appliance makers.

Earlier, Citi raised its target price to KRW 400,000 from KRW 170,000 in a June 9, 2026 report, and Bank of America was reported to have lifted its target to KRW 350,000 in late May 2026.

On credit, S&P Global Ratings upgraded the company one notch to BBB+ from BBB, citing premium appliance competitiveness and expansion in subscription and business-to-business operations.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Vehicle and TV margins have reshaped the profit mix

Operating profit of KRW 1.674tn in 1Q26 and KRW 1.579tn in 2Q26 put the half-year total above the KRW 2.478tn earned in all of 2025. VS posted KRW 191.2bn of operating profit in the second quarter, keeping its margin above 6% for two consecutive quarters.

MS swung to profit from a KRW 191.7bn operating loss a year earlier, with premium mix and cost reduction cited as drivers. Having both historically volatile divisions contribute to profit at the same time marks a change from the past.

AI data center cooling orders turning physical

The company said first-half AI data center cooling orders exceeded KRW 600bn with product already in production, and that it targets trillion-won-scale new orders by year-end. It has secured Nvidia quality certification for a 600kW-class CDU and is pursuing certification for further models.

Rather than chillers alone, it is widening its bid scope to integrated solutions bundling CDUs, liquid cooling components, controls and services, and in Asia plans to leverage references from group affiliates.

Structural cost work and executed shareholder returns

Operating cash flow reached KRW 4.281tn in 2025, above the KRW 3.843tn of 2024, while the debt-to-equity ratio fell from 160.3% to 140.3%.

On July 29, 2026 the company disclosed the early termination of a KRW 100bn buyback trust after completing its target, and the acquired 588,589 common and 141,840 preferred shares are to be fully cancelled within the year.

The same day it fixed a 2026 interim dividend of KRW 500 per common and preferred share, roughly KRW 89.7bn in total, for payment on August 28. Bulls point to the fact that the return schedule is being met even in a business with volatile earnings.

Bear factors

Quality of earnings blended with one-offs

According to coverage of the July 30, 2026 conference call, management said the second quarter included roughly KRW 300bn of net one-off gains, including a tariff refund. The company said operating profit still rose sharply year on year excluding the refund, but the refund itself is non-recurring by nature.

Right after the release, some market commentary noted that part of the improvement came from one-offs and that the company had flagged high freight rates, memory price pressure and weak consumer demand.

Judging the sustainable quarterly profit level therefore requires tracking figures excluding one-off items separately.

Cost pressure from memory, copper and logistics

In 1Q26 the average price of display-device semiconductors rose 33.1% and copper 21.1% year on year. Industry watchers expect cost pressure to persist as surging memory prices combine with raw material and logistics burdens, with supply chain uncertainty from Middle East geopolitical risk another negative.

PC product lines with high memory content in particular face heavy industry-wide cost inflation, price hikes of 15-20% have already been implemented, and further increases were described as unavoidable if memory prices keep climbing. Bears note that passing costs through can dampen demand.

A history of fourth-quarter losses and stalling demand

In 4Q25 the company reported an operating loss of KRW 109.0bn and a net loss attributable to owners of KRW 828.2bn despite revenue of KRW 23.852tn. If year-end cost concentration and restructuring-type charges recur, the first-half profit trend may not carry through to the full year.

The company itself said it expects a period of short-term demand stagnation in home appliances in the third quarter. After a strong first half, the second-half path depends jointly on costs, demand and the timing of expense recognition.

Risk factors

Trade and tariff policy

Second-quarter results included a partial refund of tariffs paid on last year's US-bound shipments, recognized as one-off income. Tariff determinations can shift with policy and litigation, so what boosted profit through a refund could equally turn into an additional burden.

On its first-quarter call the company said macro uncertainty including US tariff policy volatility and possible delays to rate cuts would persist, and that it would respond through supply chain optimization and improvements to manufacturing cost structure.

New business execution and competition

Capacity expansion tied to growing data center cooling orders has been signaled, but its scale, timing and investment locations remain undisclosed.

The company has described this as a restricted market requiring prior steps such as customer specification approval and vendor registration, and said it is at the stage of clearing those steps to build a base for order and revenue conversion.

With lead times of six to nine months, shortening delivery and internalizing key components are cited as competitive keys. If targeted orders slip in timing or size, the gap between new-business expectations and reported results could widen.

Consumer demand and macro variables

The company said recovery in consumer sentiment has been delayed by Middle East conflict and US inflation concerns, and that it expects demand improvement to be difficult amid possible price increases.

Appliances and TVs are sensitive to housing activity, interest rates and currency, so even with stable costs, margin recovery can be limited without volume support. Management's stated approach is to concentrate on the relatively resilient Global South and pursue structural improvement to secure profitability.

What to watch next

Early October 2026
Preliminary third-quarter results. The key issues are whether operating profit near the KRW 1.5tn level of the two prior quarters holds without one-off help, and how seasonal demand stagnation and cost inflation show up in margins.
Late October 2026
Final third-quarter results and the conference call. Watch divisional revenue and operating profit - notably whether HS holds a margin near 10% and MS stays profitable - plus an update on cumulative AI data center cooling orders.
During 4Q 2026
Whether the company reaches the trillion-won-scale AI data center project orders it targeted by year-end, and progress on big-tech certification of additional CDU models. Order size and customer type are clues to how the ES division's revenue mix shifts.
By end-December 2026
Execution of the disclosed cancellation of treasury shares (588,589 common and 141,840 preferred shares slated for full cancellation within the year) and whether the Hungarian vehicle-components entity begins mass production at the end of 2026. The former ties to capital policy, the latter to the vehicle revenue trajectory.
Early January 2027
Preliminary full-year 2026 results. Watch whether the 2025 pattern of fourth-quarter cost concentration repeats, whether the TV business meets its full-year profit goal, and whether the additional KRW 100bn shareholder return planned for 2027 is specified.

Overall view

The first half of 2026 was a clear improvement stretch for LG Electronics in numerical terms.

Operating profit of KRW 1.674tn in 1Q26 and KRW 1.579tn in 2Q26 put the half-year total above the KRW 2.478tn earned in all of 2025, a sharp contrast with the KRW 109.0bn operating loss and KRW 828.2bn net loss attributable to owners of 4Q25.

That said, with roughly KRW 300bn of net one-off gains cited by management and April voluntary-retirement costs both landing in the same quarter, the repeatable level of profit is something second-half results will have to verify.

Operationally, vehicle components held revenue above KRW 3tn with margins over 6% for two consecutive quarters, TVs returned to profit, and AI data center cooling orders exceeded KRW 600bn in the first half with product already in production, pointing to a shift in the business mix.

On the other side sit a 33.1% rise in display-device semiconductor prices and a 21.1% rise in copper, logistics and tariff variables, and the company's own outlook for demand stagnation in the third quarter.

The financial structure improved year on year, with 2025 operating cash flow of KRW 4.281tn and a debt-to-equity ratio of 140.3%, while return measures such as share cancellation and semiannual dividends are proceeding as disclosed.

What remains to be checked is the speed at which new-business orders convert into revenue and margin, the success of cost pass-through, and the year-end expense recognition pattern; this report is limited to organizing the facts for that assessment and contains no buy or sell opinion.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.