LG Electronics reports 791.7 billion won second quarter operating profit

Industry

Published: 07 Jul. 2022, 18:08

LG Electronics reports 791.7 billion won second quarter operating profit

Home appliances from LG Electronics are displayed at a discount mart in Seoul, Thursday. [YONHAP]

LG Electronics reported lower-than-expected second-quarter results amid weakening demand for consumer electronics, while its vehicle component business turned a profit for the first time since 2016.

In a preliminary earnings guidance released Thursday, LG Electronics forecasts an operating profit of 791.7 billion won ($608.8 million) for the April-June period, down 12.0 percent on year. That preliminary figure was lower than the market consensus of 839.2 billion won, which was published by market tracker FnGuide.

Sales were estimated at 19.47 trillion won, a 15.0 percent increase and short of the 19.52 trillion won market expectation.

The figure was down from 21.1 trillion won in the first quarter but still a record the April-June period sales and up from 17.1 trillion won from the same period last year.

LG Electronics explained in an electronic disclosure that high-end home appliance sales in the North American market drove up the numbers, despite rising raw material and freight costs and declining TV demand.

The automotive parts business, which posted losses since 2016, turned a profit in the second quarter with 2 trillion won of sales as the global automobile industry recovered from supply bottlenecks.

"Profit-wise, the business marked a turnaround in quarterly results due to the sales increase and improvement in the cost structure," LG Electronics said in the statement.

In the January-March period, the auto parts unit reported quarterly revenue of 1.9 trillion won and an operating loss of 6.3 billion won.

While ramping up automotive, healthcare and other new business investments, the company has been dumping under-performing hardware businesses.

LG Electronics explained that exit costs from the discontinued solar panel business have been included in the second-quarter results.

The electronics manufacturer announced in February that it will cease the production of the units from June 30, after years of declining revenues from the under-performing business. While the announcement was made in February, the deficit suffered by the unit has been reflected in the second-quarter results after the business was fully discontinued at the end of June.

For the past 12 years, LG Electronics has sold 58.1 trillion won of solar panels, which is only 1.5 percent of overall revenue.

The company also shed its money-losing smartphone business last year.

The outlook for the rest of this year remains uncertain, as demand for consumer electronics is weakening. LG Electronics had 10.2 trillion won of inventory in the first quarter, up 27.7 percent on year.

Neither segmentation nor net profit were provided in the guidance released by the company Thursday.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]