Press Release

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LG Innotek Releases 2018 4th Quarter Earnings Report.

2019. 01. 25.

■ 4Q sales of 2,430.5 billion KRW and operating profit of 103.6 billion KRW
– Sales increased by 5.1% and operating profit decreased by 20.1% QoQ.
– Sales decreased by 15.3% and operating profit decreased by 26.6% from the same quarter of the previous year.
■ Profitability decreased due to poor smartphone parts market conditions.
■ The company posted annual sales of 7,982.1 billion KRW, which is the largest ever.
– The optical solution business and electric component business led the growth.

LG Innotek recorded sales of 2,430.5 billion KRW and operating profit of 103.6 billion KRW in the fourth quarter of 2018 under K-IFRS. Sales increased by 5.1% and operating profit decreased by 20.1% from the previous quarter. Sales decreased by 15.3%, and operating profit decreased by 26.6% from the same quarter of the previous year.

A representative of the company said, “Although the sales increased from the previous quarter due to continued demand in new smartphone model parts and automobile parts, the profit decreased due to the sluggish market conditions, customers’ adjustment of the end-of-year inventory, and increase in fixed costs.”

Meanwhile, LG Innotek posted the record sales of 7,982.1 billion KRW for the year. This sales volume is a 4.5% increase from the previous year. The optical solution business, which produces camera modules, and the electric component business, which produces vehicle motor sensors, led the sales growth. Annual operating profit was 263.5 billion KRW, down 11.1% from the previous year.

Performance by business units

The optics solution business unit posted sales of 1,673.8 billion KRW, up 5% QoQ. The sales increase was due to increased sales of new models. Sales decreased by 20% from the same quarter of the previous year due to sluggish demand for camera modules caused by slowing growth of the smartphone market. Annual sales grew by 8.9% YoY to 5,969 billion KRW. The sales growth is the result of responding to the market ahead of time by introducing differentiated products such as multiple-camera modules and new technology modules.

The substrate and material business unit posted sales of 310.1 billion KRW, up 6% QoQ. This sales volume is a 4% decrease from the same quarter of the previous year. Sales of new products such as next-generation photomasks increased, but the demand for 2-Metal COF (two-metal chip on film) for mobile displays decreased. Annual sales grew by 1.5% YoY to 1,158.8 billion KRW. This is due to increase in the demand for high-quality substrate materials caused by the expansion of the high-resolution display market, including OLEDs.

The automotive components and electronics business unit posted sales of 264.7 billion KRW, up 10% from the previous quarter and up 22% from the same quarter of the previous year. Together with the increase in the sales of motor sensors and communication modules for automobiles, sales of camera modules for ADAS (Advanced Driver Assistance System), which is a key part for semi-autonomous driving, and sales of power components for electric vehicles have increased. The annual sales grew by 13% YoY to 963.3 billion KRW. As of the end of last December, the order backlog of electric components totaled 12 trillion KRW, laying the foundation for mid-to-long term growth.

The LED business unit posted sales of 94.3 billion KRW, down 22% from the previous quarter and down 31% from the same quarter of the previous year. Annual sales fell by 29.9% YoY to 456.5 billion KRW. The decline in sales at the LED business was due to reducing the business size for low-margin products such as display backlight units and general lighting sources, as well as streamlining the business structure, focusing on high-value products with high growth potential, such as UV LEDs for sterilization and automotive LEDs.