LG Innotek (CEO Jong-seok Park, 011070: Korea SE) posted that sales were down from the year-ago quarter due to the global recession and a decrease in demand for smartphone components. However, the automotive components business, which is their new growth engine, continued its growth.

According to the Korean International Financial Reporting Standards (K-IFRSs), LG Innotek posted sales of 1.195 trillion KRW and an operating profit of 400 million KRW. Sales decreased by 22.5%, and profit decreased by 99.4% from the year-ago quarter. Compared to the previous quarter, the company’s sales decreased by 24.9%, and profits decreased by 99.1%.

According to a company representative, “Slow recovery from the recession and a slowing growth of the smartphone market as well as a slowing in seasonal demand affected our earnings. Despite the difficult market, however, we have reinforced our competitive advantage across key business units including our automotive components business to strengthen our business fundamentals.”

The company’s automotive components business has shown stable growth and posted sales of 187.1 billion KRW, which is a 25% increase from the year-ago quarter and a 4% increase from the last quarter.

LG Innotek plans to actively respond to the increase in demand for camera modules from LG Electronics and customers of China region, and exert efforts to secure new customers for each business unit in the second quarter. In particular, the company plans to expand its components business into automotive and next-generation IoT.

Performance by business division

Optical Solutions business unit posted sales of 465.7 billion KRW, which is a 35% decrease from the year-ago quarter, due to a decrease in demand from global customers and slowing seasonal demands. This is a 44% decrease from the quarter prior. On the other hand, the division succeeded in mass-producing camera modules for LG G5 and diversified its components business by producing virtual reality devices such as 360° cameras.

Substrate & Material business unit posted sales of 320 billion KRW, which is a 16% decrease from the year-ago quarter, due to a decrease in demand for touch window because of the spread of in-cell touch technology. This is an 11% decrease in sales from the quarter prior. However, the unit curtailed the drop in sales by achieving stable performance in the components for display business including photomask.

Automotive Components business unit posted sales of 187.1 billion KRW, which is a 25% increase from the year-ago quarter, thanks to the increase in sales of motors and sensors for steering and braking systems and wireless communication modules for automotive in the global market. This is a 4% increase from the quarter prior. The automotive components business as a percentage of the company’s total sales has increased to 15.6% from 9.7% in the year-ago quarter.

LED business unit posted sales of 172.1 billion KRW, which is a 22% decrease from the year-ago quarter, due to a decrease in LED demand for TV backlight units (BLU). This is a 3% decrease from the quarter prior. The turnaround in LED lighting sales led to a sales increase, occupying 48% of sales for the LED business unit.

###