LG Electronics Kiwi operation posts strong financial performance in 2024 despite higher costs
LG Electronics New Zealand has reported a solid financial performance for the year ending 31 December 2024, with post-tax profit increasing to $26.9 million, up from $20.6 million in 2023.
The results reflect the company's continued strength in the consumer electronics market, particularly in household appliances, despite pressures from rising operational expenses and cost of sales.
According to the company's general purpose annual report, revenue from the sale of products climbed to $1.03 billion, a 9.1% increase compared to $947.4 million the previous year. This growth contributed to a gross profit of $238.8 million, up from $211.1 million in 2023, representing an improvement of 13.1% year-on-year.
Operating expenses, however, rose across several key areas. Employee benefits expense increased to $51.6 million (2023: $46.7 million), driven by higher salaries, superannuation contributions, and welfare costs. Distribution and selling expenses surged by 15.8% to $96.5 million, while marketing and promotional costs also grew modestly.
Depreciation and amortisation charges totalled $5.5 million, reflecting investment in leased premises and plant and equipment. Finance costs more than doubled to $1.2 million, likely a result of lease interest and other related expenses, including the head office lease which accounts for $15.2 million in lease liabilities as of year-end.
Despite these increases in costs, LG Electronics managed to deliver a 29.4% rise in profit before tax, which reached $38.5 million. This was partially offset by a higher income tax expense of $11.6 million, compared with $9.2 million the year prior.
The company declared and paid dividends totalling $35 million during the year, matching the dividend amount paid in 2023. Retained earnings at year-end stood at $57.8 million, down from $65.9 million in the prior year, due primarily to the dividend distribution.
From a balance sheet perspective, total assets rose to $330.1 million (2023: $286.2 million), supported by a significant increase in inventories from $80.8 million to $128.8 million, including a rise in finished goods. The right to returned goods asset also rose notably to $10.7 million (2023: $6.2 million), reflecting customer return provisions under the company's returns policy.
Total liabilities increased to $269.6 million (2023: $217.7 million), with trade and other payables rising to $160 million and provisions—comprising warranty, restoration and employee benefits—reaching nearly $40.7 million. The refund liability also climbed from $13.1 million to $21.8 million, while contract liabilities related to customer rebates remained stable at $23.6 million.
The company's cash flow from operating activities decreased slightly to $39.6 million (2023: $51.4 million), with receipts from customers amounting to $1.13 billion. Payments to suppliers and employees totalled $1.1 billion. Capital expenditure was markedly lower at $959,000, compared to $13.7 million in 2023.
The directors noted that there were no significant changes in the state of affairs during the year, nor any subsequent events expected to affect operations in future financial periods. They also stated no intention to alter the scope of the company's operations.
LG Electronics continues to operate as a wholly owned subsidiary of LG Electronics Inc. of Korea and remains reliant on the parent company and its subsidiaries for inventory supply. The company's auditors, Deloitte Touche Tohmatsu, issued an unqualified opinion on the financial statements, confirming compliance with the Corporations Act 2001 and applicable accounting standards.
In sum, while LG Electronics faced higher costs in several operational areas, its ability to grow revenue and maintain profitability underscores its resilient position in the Australian consumer electronics sector.
