LG Electronics New Zealand branch lifts profit as costs fall
Wed, 1st Jul 2026 (Today)
LG Electronics' New Zealand branch reported higher profit for the year ended 31 December 2025 despite a modest decline in revenue, as lower operating costs and a reduced tax expense offset softer sales.
The company recorded revenue of NZD $109.13 million, down from NZD $109.84 million in 2024. Profit before tax increased to NZD $3.40 million from NZD $3.25 million, while net profit rose to NZD $2.65 million, compared with NZD $2.26 million a year earlier.
Revenue trends
Revenue declined by less than 1% during the year, reflecting relatively stable trading conditions for the New Zealand operation.
Cost of sales edged higher to NZD $84.59 million from NZD $84.17 million, reducing gross profit to NZD $24.54 million from NZD $25.67 million in the previous year.
The business imports and sells household electrical appliances, information systems equipment and mobile communication handsets. The financial statements noted there were no changes to the branch's principal activities during the year.
Cost control
Several operating expenses declined during 2025, helping offset the reduction in gross profit.
Employee benefits expense fell to NZD $4.96 million from NZD $5.00 million, while depreciation expense increased slightly to NZD $708,888.
Promotion costs declined significantly to NZD $784,142 from NZD $1.75 million. Marketing expenses also fell to NZD $1.09 million from NZD $1.82 million.
Distribution and selling expenses eased to NZD $8.91 million, compared with NZD $9.11 million in 2024. Administrative expenses increased modestly to NZD $1.06 million, while other expenses declined sharply to NZD $192,395 from NZD $816 recorded in the previous year. Finance costs rose to NZD $140,001 from NZD $50,044.
The lower operating cost base contributed to improved earnings before tax despite weaker revenue.
Tax impact
Income tax expense fell to NZD $757,623, down from NZD $984,491 in 2024.
The accounts show the lower tax charge reflected current tax adjustments, together with deferred tax movements, during the year. The company also noted that New Zealand's implementation of the OECD Pillar Two model rules was not expected to have an impact on current-year income tax expense.
Balance sheet
Total assets increased to NZD $32.58 million at year end from NZD $26.48 million a year earlier.
Current assets rose to NZD $24.89 million, driven by higher trade receivables of NZD $11.37 million and inventories of NZD $12.36 million.
Total liabilities increased to NZD $26.73 million from NZD $20.12 million. Trade and other payables rose to NZD $14.64 million, while contract liabilities increased to NZD $2.72 million.
Net assets stood at NZD $5.85 million, compared with NZD $6.30 million at the end of 2024.
Cash flows
The branch generated NZD $4.02 million in net cash from operating activities during 2025, reversing a cash outflow of NZD $1.88 million in the prior year.
Receipts from customers totalled NZD $110.66 million, while payments to suppliers and employees amounted to NZD $103.73 million.
Investing activity remained limited, with NZD $245,380 used to acquire property, plant and equipment.
Financing activities resulted in a net cash outflow of NZD $5.78 million, primarily reflecting NZD $3.10 million in net advances to head office and lease repayments. Cash at the bank closed the year at NZD $774, compared with NZD $500 at the start of the year.
Related parties
The financial statements identify LG Electronics in South Korea as the branch's immediate and ultimate parent.
Purchases from the parent company totalled NZD $87.88 million during 2025, broadly in line with the previous year. The New Zealand branch was also charged NZD $3.53 million by the head office for accounting and management services. Related-party payables increased to NZD $7.23 million from NZD $4.17 million.
Restatement
The company restated certain comparative figures for 2024 to reclassify balances with the head office as part of the head office account rather than related-party receivables.
The restatement affected the presentation of the statement of financial position, the statement of changes in head office account, and the statement of cash flows, but did not alter the reported profit for the year.