LG Electronics sees net of $260 million in second quarter

LG Twin Tower in Yeouido, western SeouL. [YONHAP]

LG Electronics on Friday reported a net of 338 billion won ($260 million) for the second quarter, a turnaround from last year’s net loss of 291.9 billion won, thanks to strong sales of high-end electronics products in North America.

The figure was below a market consensus of 388 billion compiled by market tracker FnGuide.

Sales grew 15 percent on year to 19.46 trillion won, a record for the April-June period but falling short of a consensus of 19.53 trillion won. Operating profit was 792.2 billion won, down 12 percent on year and lower than a projected 839.2 billion won.

Compared to a preliminary earnings guidance the company released on July 7, the sales figure was 8 billion won short, while the operating profit was over the estimated figure by 500 million won.

Of the 792.2 billion won operating profit, home appliances accounted for 432.2 billion won, or 56.7 percent. Its contribution to operating profit declined 33.6 percent from last year due to raw material price hikes and an increase in freight costs, though sales were strong.

Home appliance sales increased 18.4 percent on year to 8.68 trillion won, the first time they reached the 8 trillion level. High-end home appliance sales, especially in North America, drove the figures, said the company.

The television and audio business reported an operating loss of 18.9 billion won compared to last year’s operating profit of 331.7 billion won. Sales fell 14.5 percent to 3.46 trillion won. A decline in TV demand worldwide in the post-pandemic era undermined the performance.

Meanwhile, the automotive parts business, which posted losses since 2016, turned an operating profit in the second quarter of 50 billion won. Sales grew 19.4 percent on year to 2.03 trillion won, as the global automobile industry recovered from supply bottlenecks.

The electronics division making laptops, PC monitors, healthcare devices, cloud computing, digital signs, display components and other products for corporate customers saw an 18.8 percent increase in sales to 1.54 trillion won due to post-pandemic demand recovery. However, operating profit decreased by 81.3 percent to 14.3 billion won owing to an increase in raw material and freight costs.

A loss of 71.1 billion won from the discontinued solar panel business was included in the second-quarter net results.

LG announced in February that it would halt production of solar panels from June 30 after years of declining revenues.

The outlook for the rest of this year remains uncertain, the company said, as demand for consumer electronics is weakening.

"In terms of the business environment, market uncertainty caused by the Ukraine-Russia war and shrinking consumer confidence is likely to continue into the third quarter," said Shim Sang-bo, who oversees investor relations at LG Electronics, during an online conference call Friday.

However, Seo Young-won, who leads the company's TV and audio business operation management team, said, "We do expect the sales level to recover in the second half during the Qatar World Cup in November and Black Friday season."

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