LG forecasts record Q1 sales, operating profit
LG Electronics expects to report record sales and operating profit for the first quarter thanks to one-time gains and strong demand for its home appliances.
In an earnings guidance released Thursday, the Seoul-based electronics maker estimated an operating profit of 1.9 trillion ($1.5 billion) won for the first quarter, up 6.4 percent on-year. That preliminary figure was higher than the market consensus of 1.4 trillion won, which was published by market tracker FnGuide.
Sales were estimated at 21.1 trillion won, an 18.5 percent increase over a year ago and higher than the market expectation of 19.9 trillion won.
In an electronic disclosure, LG Electronics explained that the higher-than-expected profit is attributed to a one-time gain related to licensing its patents, and that except for the that factor, “operating profit is in line with the market estimate.”
High-end appliances including televisions, refrigerators and washing machines led the growth in earnings.
In the television segment, an increase in sales of organic light-emitting diode (OLED) TVs helped boost revenue and profit.
Market tracker Omdia predicted that demand for the OLED TVs will continue to rise with sales of OLED panels expected to jump 25 percent to top 10 million this year. LG Electronics sells TV sets and LG Display, 37.9 percent owned by LG Electronics, manufactures panels.
A reduced loss from the vehicle solution division also helped improve profit, according to Kim Yang-jae, an analyst at IBK Securities.
LG’s automotive parts business has posted losses since 2016, but the company is redoubling efforts in key parts for EVs including motors, inverters and onboard chargers as well as in-vehicle infotainment systems.
The company’s decision to pull out of under-performing businesses also helped the bottom line.
“LG Electronics is rebuilding its business portfolio surrounding robotics, automotive and advanced appliances after exiting from the money-losing smartphone business and solar panel manufacturing,” Kim said in a report.
LG Electronics announced in February that it would stop production of solar panels after 12 years.
Still, the costs of that exit were not included in the first quarter results since the suspension will take effect in June.
Last year, it closed its smartphone business after 25 years of manufacturing the devices. The division had been in the red since the second quarter of 2015, and its accumulated losses totaled 5 trillion won.
In 2019, LG Electronics pulled out of fuel-cell manufacturing and sold its water-purifying business to Techcross, a local shipbuilder.
BY PARK EUN-JEE [email@example.com]