(The tariff effects of the Trump administration's second term) are expected to be fully reflected starting in the second quarter. If LG Electronics exceeds a bearable level, it will have to consider price increases for most products.
On the 24th, Jo Joo-wan, president of LG Electronics, met with reporters ahead of a special CEO lecture held for students in the Department of Electrical and Computer Engineering at Seoul National University, stating, "The establishment of a production base in the United States is a last resort." On that day, Jo gave a lecture on the theme of "innovation of experience completed by technology." Over 200 students from the Department of Electrical and Computer Engineering attended, where Jo introduced how LG Electronics' artificial intelligence (AI)-based advanced technology understands customers and provides better experiences.
Jo predicted that the impact of the U.S.-originating tariffs would begin to take effect from the second quarter of this year. Although the U.S. government suspended the mutual tariffs designated by country for 90 days, the basic tariff of 10% on all imports and item-specific tariffs of 25% on steel and automobiles remain in place.
Jo noted, "The pull-in effect (of purchasing products in advance due to concerns about rising costs from tariffs) did not significantly appear in the first quarter," adding, "Whether the situation deteriorates due to tariffs or has a positive impact, I believe it will start in the second quarter."
He also revealed that he is considering price increases for products. Jo said, "Once mutual tariffs of around 10% are imposed, product prices are inevitably expected to rise," and added, "For now, we will endure up to a bearable level, but if it exceeds that limit, most product prices will increase."
He mentioned that he would improve profitability in the medium to long term by enhancing the business portfolio. Regarding LG Electronics' performance in the first quarter, he stated, "As the revenue proportion of the business-to-business (B2B) sector has significantly increased, the company's business structure has been enhanced," adding, "I believe that the company's business portfolio is moving in a stable direction."
He added, "Although the operating profit in the first quarter this year differs by about 20 billion won compared to the previous year, it is positive in that the qualitative growth that LG Electronics has emphasized has been realized amid intensified competition with Chinese companies."
In the first quarter of this year, LG Electronics achieved sales of 22.7398 trillion won and operating profit of 1.2591 trillion won. LG Electronics recorded the highest sales ever for the first quarter, but the operating profit decreased by 5.7% compared to the same period last year. However, both the automotive and heating, ventilation, and air conditioning (HVAC) businesses, which are core to B2B, recorded the highest quarterly sales and operating profits.
Jo said that the initial public offering (IPO) of the Indian subsidiary would also be adjusted in pace. He noted, "As uncertainties in international affairs are increasing, I believe it will be acceptable to do so when normalization occurs," and added, "It is more important to receive proper evaluation of LG Electronics' value, and I believe that direction will benefit our shareholders."