Days out from CES 2025 debt laden LG Electronics is facing another Q4 earnings miss, due to falling sales of their TV, and appliances coupled with increased operational costs in claims analysts.

The Company that is rolling out a multitude of new products at CES is currently under pressure in multiple markets with brands such as TCL and Hisense stripping TV share away from the Company.

Locally LG kicked off the year facing declining sales and profits after a horror 2023 financial year, then late last year former sales director Michael Richardson announced his exit from the business, months after he underwent hospital treatment for a medical condition. He has not been replaced as the local business looks to cut costs.

Globally the Company is facing mounting debt with the South Korean business facing an uncertain future in the consumer market resulting in a global switch to B2B and enterprise markets. The Company is also investing in selling consumer goods directly.

In October, the business reported a significant 20.9% drop in operating profit with the business struggling to deliver a healthy balance sheet.

Currently the Company has liabilities of A$29.57 billion with repayment of borrowings falling due during the next 12 months with another $14.24 billion due in 2026.

On top of that the business that is trying to carve out a niche in the B2B and EV automotive market is facing investigations into their collection of data on consumers viewing and home habits which are being collected using their WebOS software found in TV’s.

As for cash on hand LG as of Q3 had A$8.48 billion and $12.05 billion due in receivables with the net debt set to be around A$25.2 billion taking into account the current cash flow.

The problem LG Electronics is facing sluggish demand for electric vehicle parts which the business punted on ahead of further investments in consumer goods.

The fall in demand for LG components weighed on the South Korean consumer electronics giant during the October-December.

It’s also tipped that profits at the South Korean Company is set to fall further with the business tipped to report around $283 million in profits Vs a forecast $526 million.

Currently the Companies debt exceeds the Companies A$16 billion in market capitalization.

Analysts at Simply Wall Street claim that ‘Extremely heavy dilution would be required if the company were forced to pay down its liabilities by raising capital at the current share price’.

In the last three years, LG Electronics created free cash flow amounting to 3.3% of its EBIT, which has been described as ‘An uninspiring performance’.

Simply Wall Street Analysts claim that ‘Cash conversion that low sparks a little paranoia about is ability to extinguish debt’.

‘Mulling over LG Electronics attempt at staying on top of its total liabilities, we’re certainly not enthusiastic. But at least it’s pretty decent at covering its interest expense with its EBIT; that’s encouraging’.

They concluded ‘Overall, we think it’s fair to say that LG Electronics has enough debt that there are some real risks around the balance sheet’.