LG CNS posts double-digit profit growth ahead of 2023 IPO

The LG Group unit recorded its largest-ever 2nd-quarter results on the back of growing corporate digitalization

LG CNS' business sectors (Courtesy of LG CNS)

Sung-Soo Bae 1

2022-08-16 17:53:48 baebae@hankyung.com

Artificial intelligence

South Korea's largest cloud computing service provider LG CNS Co. on Tuesday reported double-digit growth in both profit and revenue in the second quarter as the COVID-19 pandemic accelerated corporate digitalization across industries.

Its operating profit and revenue marked the company's largest-ever results for a second quarter, which would pave the way for an initial public offering planned for next year.

Revenue came in at 1.1 trillion won ($840 million) for the April-June period, a 35% on-year jump and a 30% increase from a quarter earlier. It was the first time for company's quarterly revenue to surpass the 1 trillion won mark.

Second-quarter operating profit spiked 55% to 87.3 billion won from the previous year. It was up 35% compared with the first quarter.

The growing demand for cloud computing, smart factories and smart logistics are credited for its brisk results. Smart factories and logistics refer to AI- and data-driven automated processes.

Cloud service was the key driver of its record-setting results. As a managed service provider, LG CNS transfers customers' IT systems to cloud computing platforms such as Microsoft's Azure.

In smart factory services, LG CNS is adopting AI, big data and digital twin technologies to boost productivity. A digital twin is a virtual representation of a real-world system using simulation and machine learning.

The company has received a string of new major projects in the first half of this year, including one for the online portal Naver Corp.'s third cloud center in Busan.

It also introduced a subscription service for logistics robots.

In May, LG CNS, which is 35% owned by Macquarie Group, sent requests for proposals to brokerage companies to select its IPO underwriters, according to investment banking sources at the time.

The planned IPO would help Macquarie Group's private equity arm to exit from the Korean company for around $2 billion, or nearly triple its investment.

Macquarie bought a 35% stake in the LG Group arm from the group's holding company LG Corp. for 950 billion won in 2020, beating KKR & Co., the other shortlisted bidder.

Write to Sung-Soo Bae at baebae@hankyung.com
Yeonhee Kim edited this article