LG Electronics Records Best Operating Profit Ratio out of All Global Household Appliance Manufacturers

Feb 10, 2017

LG Electronics recorded 7.7% on its operating profit ratio in 2016 which is the best operating profit ratio out of all global household appliance industries. It was able to reverse performance of its household appliance business that was seen as a declining industry due to reduced profit ratio. It was important that it has focused on premium household appliances and B2B.
According to results from performance of global household appliance manufacturers, LG Electronics beat Whirlpool and Electrolux, which recorded 6.5% and 5.2% respectively in operating profit ratio, in operating profit ratio in 2016 by recording 7.7%.
This is the first time when LG Electronics recorded the best operating profit ratio out of all global household appliance manufacturers. LG Electronics also made 2nd place for the first time in sales followed by Whirlpool and show that its household appliance business is growing quantitatively and qualitatively.
Based on results from performance in 2015, LG Electronics’ household appliance business’ operating profit ratio (5.9%) fell behind of Whirlpool’s operating profit ratio (6.2%). However it was able to reverse the ranking in just one year by increasing its operating profit ratio by 1.8%.

LG Electronics launched its ultra-premium brand called ‘LG Signature’ in 2016 and has accelerated its premium strategy. <LG Electronics launched its ultra-premium brand called ‘LG Signature’ in 2016 and has accelerated its premium strategy.>

Its sales increased as well. LG Electronics placed third place in sales in 2015 ($14.54068 billion) after losing closely to Electrolux but it was able to beat Electrolux in sales by huge margin in 2016 and made second place in sales. LG Electronics made $15.15494 billion in sales from its household appliance business in 2016 and it was able to beat Electrolux, which made $13.80984 billion in sales, by huge margin. Whirlpool was able to take first place in sales by making $20.718 billion.
One of the reasons why LG Electronics was able to make positive performance from its household appliance business was by focusing on premium household appliances and B2B business under the guidance from Vice-Chairman Cho Seong-jin, who was in charge of being Director of H&A (Home Appliance & Air Solution) Business sector until last year. LG Electronics was able to draw attention and gain popularities of its premium products such as Twin Wash, Signature Kitchen Sweet and others in 2016. Also it launched its ultra-premium brand called ‘LG Signature’ which was effective in increasing brand power of entire household appliances. Fact that LG Electronics was able to secure stable profits by strengthening its B2B household appliance businesses such as component businesses such as motors and compressors and system air conditioner is seen as another reason why its profit ratio was able to increase.
This trend of high profit ratio for LG Electronics’ household appliance business is expected to continue in the future. Not only is LG Electronics going to maintain its premium strategy but it is also planning to increase value of products by applying high-tech technologies such as IoT (Internet of Things) and AI (Artificial Intelligence) to its products.
“Our main strategy is to be the best in each brand.” said a representative for LG Electronics. “We are planning to maintain our growth through premium strategies, application of high-tech technologies, and increase of our brand image.”
Staff Reporter Kwon, Keonho | wingh1@etnews.com

■Current state of performance of major global household appliance manufacturers
▲LG Electronics ΔSales: $14.632 billion in 2015 and $15.155 billion in 2016 ΔOperating profits: $869 million in 2015 and $1.173 billion in 2016 ΔOperating profit ratio: 5.9% in 2015 and 7.7% in 2016
▲Electrolux ΔSales: $14.652 billion in 2015 and $13.810 billion in 2016 ΔOperating profits: $325 million in 2015 and $716 million in 2016 ΔOperating profit ratio: 2.2% in 2015 and 5.2% in 2016
▲Whirlpool ΔSales: $20.891 billion in 2015 and $20.718 billion in 2016 ΔOperating profits: $1.285 billion in 2015 and $1.354 billion in 2016 ΔOperating profit ratio: 6.2% in 2015 and 6.5% in 2016 <■Current state of performance of major global household appliance manufacturers ▲LG Electronics ΔSales: $14.632 billion in 2015 and $15.155 billion in 2016 ΔOperating profits: $869 million in 2015 and $1.173 billion in 2016 ΔOperating profit ratio: 5.9% in 2015 and 7.7% in 2016 ▲Electrolux ΔSales: $14.652 billion in 2015 and $13.810 billion in 2016 ΔOperating profits: $325 million in 2015 and $716 million in 2016 ΔOperating profit ratio: 2.2% in 2015 and 5.2% in 2016 ▲Whirlpool ΔSales: $20.891 billion in 2015 and $20.718 billion in 2016 ΔOperating profits: $1.285 billion in 2015 and $1.354 billion in 2016 ΔOperating profit ratio: 6.2% in 2015 and 6.5% in 2016>

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