LS Electric's Strong Performance: A Boost in Profitability
LS Electric (010120) has successfully converted its power equipment orders into revenue, resulting in a significant boost to its profitability. The company attributes this improvement to increased sales of high-margin projects and products in the U.S. and domestic markets, as outlined in its third-quarter performance report. While new orders for the quarter were lower compared to the previous quarter, the recent long-term supply contracts signed with major U.S. tech companies ensure a steady supply for next year.
According to LS Electric, the preliminary consolidated figures for the third quarter of the year show a substantial increase in revenue and profitability. The company's revenue reached KRW 1.88 trillion, a 54.4% year-over-year growth, while its operating profit soared to KRW 233.5 billion, marking a remarkable 131.7% increase. Compared to the previous quarter, revenue grew by 19.1%, and operating profit increased by 30.8%, both setting new quarterly records. The operating profit margin saw a significant improvement, rising from 8.3% in the same quarter last year to 12.4% this year, a 4.1% increase.
Strong Growth in Power Distribution Panels and Ultra-High Voltage Transformers
The growth of power distribution panels and ultra-high voltage transformers was particularly notable. Third-quarter sales of distribution panels increased by 120% year-over-year, while ultra-high voltage transformer sales grew by 106%. North American sales reached approximately $430 million, a 25% increase from the previous quarter.
Korea Investment & Securities Co. attributed the improved profitability of core businesses to the expanded sales of power equipment to the U.S. market. While the third quarter reflected both the benefits of U.S. tariff refunds and the costs of restructuring the Chinese subsidiary, these effects largely offset each other, resulting in a minimal net impact on profits.
Order flow varied depending on the comparison period. While new orders in the third quarter increased by 132.9% year-over-year to $1.26 billion, they decreased by 23.6% compared to the previous quarter's $1.68 billion. The order backlog at the end of the quarter stood at $6.43 billion, a 0.6% increase from the previous quarter, maintaining a similar level.
Since the third quarter, announced contracts have provided more specific details on next year's supply schedule. LS Electric disclosed on November 19th that it had secured a $143 million contract to supply data center distribution solutions to a major U.S. tech company. The supplied products, including 38-kilovolt (kV) high-voltage distribution panels, will distribute power to data centers and protect equipment in the event of power anomalies.
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