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TRADE LENS RESEARCH

COMPANY RESEARCH 01

LG Electronics — HVAC Drives Today's Earnings; AI Cooling Is the Next Growth Engine

Assessing the existing HVAC earnings base and the growth potential of AI data center cooling

Published Analysis Date 2026-09-29COMPANY RESEARCH
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Key Conclusion

TradeLens assesses LG Electronics’ medium- to long-term HVAC outlook positively: an established earnings base is expanding into industrial applications, services and AI data center cooling. Cooling has begun winning orders, but order totals are not current-period revenue or CDU-only sales. The near-term priority remains ES margin and year-on-year profit recovery; medium-term progress depends on shipments, customer acceptance, repeat orders and cash collection, alongside resilience in the existing businesses.

Research Summary

LG Electronics’ HVAC business already contributes materially to earnings. In FY2025, ES generated KRW 9.323 trillion in revenue and KRW 647.3 billion in operating profit, equivalent to 26.1% of consolidated operating profit. AI data center cooling adds a growth path to that existing base: the company reported more than KRW 600 billion in first-half 2026 cooling orders, with production under way. Yet ES operating profit declined 26.3% year on year in the same half, so stronger orders should not be confused with immediate earnings acceleration. This report separates the existing HVAC profit base from the commercialization of chillers and coolant distribution units, examining LG’s integrated portfolio, installation and service capabilities, and competition from other established suppliers. Illustrative calculations test how much incremental cooling revenue and margin improvement would be needed to affect consolidated earnings; they are not company forecasts. The central business view is positive, but the more credible path is gradual HVAC profit recovery with a new growth engine, rather than an immediate group-wide surge driven by cooling alone. The key evidence is year-on-year ES profit and margin recovery, conversion of orders into shipments and acceptance, repeat customer orders, and cash collection without deterioration elsewhere in the group.

Key Points

  • HVAC is an established earnings contributor: FY2025 ES operating profit was KRW 647.3 billion, equivalent to 26.1% of consolidated operating profit.
  • Company-reported 1H2026 cooling orders exceeded KRW 600 billion, but orders are not current revenue, CDU-only sales or shipments to NVIDIA.
  • ES operating profit fell 26.3% year on year in 1H2026, making margin recovery the first near-term earnings test.
  • LG’s integrated chiller, air-cooling and liquid-cooling portfolio, together with installation and service capabilities, provides an entry platform—not a monopoly.
  • A material group earnings contribution requires scale, repeat orders and cash collection, while existing appliance and media businesses remain resilient.
Read ReportDownload PDFPDF · 13 pages

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