LG Electronics (066570.KS) has achieved an earnings rebound through expansion of business-to-business (B2B) ventures and new markets in the Global South. The company's first-quarter operating profit grew 33% year-on-year while swinging back to black after posting its first quarterly loss in nine years in the previous quarter. LG Electronics plans to sustain its growth momentum by pursuing new businesses including physical AI, centered on the LG Group's broader artificial intelligence strategy.
LG Electronics' first-quarter operating profit came in at a preliminary 1.6736 trillion won, according to industry sources on the 8th. The figure marks a rebound from 1.2591 trillion won in the first quarter of last year, which had represented a slight decline from the same period in 2024. The year-on-year growth rate reached 33%. The company also escaped a 109 billion won loss posted in the previous quarter within just one quarter.
The result draws particular industry attention as the company defended profitability amid cost pressures from tariffs and rising fuel prices driven by the Middle East conflict. LG Electronics diversified its global supply chain to reduce costs and expanded overseas production bases, including pursuing construction of a new $200 million (approximately 300 billion won) production facility in Brazil linked to its Global South expansion. Cost savings from voluntary retirement programs last year and the introduction of in-house AI training and adoption also contributed to cost efficiencies.
First-quarter revenue came in at a preliminary 23.733 trillion won. B2B new businesses contributed significantly, including built-in appliances sold to home builders and vehicle components for electric vehicles. LG Electronics has set a goal of increasing built-in appliance revenue tenfold in Europe, its key market, by 2030. For vehicle components, rising fuel costs are expected to drive demand for electric vehicles over internal combustion engine cars. The Vehicle component Solutions (VS) division's first-quarter operating profit is estimated to have risen more than 50% to nearly 200 billion won. Subsidiary LG Innotek, which supplies camera modules, also appeared to have grown more than 10% as Apple's iPhone continued its strong sales run.
LG Electronics is also focusing on pioneering the Global South, where it has set a target of doubling revenue by 2030. The Global South encompasses emerging markets including India, the Middle East, and South America with a combined population of approximately 2 billion. Kwang-mo Koo, LG Group chairman, recently visited LG Electronics' operations in Brazil to provide direct support.
LG Electronics' core strategy this year is expanding into AI business centered on robotics. Ryu Jae-cheol, CEO of LG Electronics, said at a recent annual shareholders' meeting, "We will establish a mass production system within this year so that we can independently design, produce, and supply actuators centered on our 'Axium' product." He added, "Based on our annual motor mass production infrastructure of 45 million units, we will build a lineup optimized for diverse customer needs and robot types."
In a related move, Chairman Koo met with heads of AI companies in Silicon Valley on April 2 (local time) to discuss AI collaboration. Koo first met with key executives including Alex Karp, co-founder and CEO of Palantir, and shared case studies on the application of "Ontology," the company's AI-based core operating system. Palantir has achieved distinctive AI transformation results using Ontology across various industrial sectors including manufacturing, finance, and logistics.
Koo then met with Deepak Pathak and Abhinav Gupta, co-founders of physical AI company Skild AI, and observed a demonstration of humanoid robots equipped with a Robot Foundation Model (RFM). Skild AI is regarded as a global leader in the RFM field, which serves as the brain of robots. LG Technology Ventures, SoftBank, and Nvidia have made equity investments in the company.
Koo also visited LG Technology Ventures, the LG Group's corporate venture capital (CVC) affiliate, to review its investment strategy. He met with CEO Kim Dong-soo and other executives to examine major changes in the U.S. investment landscape and future investment directions, and exchanged views on LG's investment portfolio strategy. Koo reportedly told LG Technology Ventures, "I ask you to serve as a forward base that can build one pillar of the group's future portfolio through preemptive investment amid the AI paradigm shift."