LG's net falls 35% on record sales in Q3

Industry

Published: 28 Oct. 2022, 17:57

LG's net falls 35% on record sales in Q3

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

LG Electronics reported a net profit of 336.5 billion won ($236.6 million) for the third quarter, down 34.8 percent on year and short of analyst expectations of 414.7 billion won compiled by market tracker Company Wise.

LG Electronics’ operating profit rose 25.1 percent to 746.6 billion won, in line with a preliminary figure reported on Oct. 7, yet missing a market forecast of 876.3 billion won.

Sales were a record 21.17 trillion won, up 14.1 percent, above the consensus of 20.2 trillion won. Sales were above the company's preliminary figure by 5.4 billion won.

Strong sales of luxury home appliances and vehicle components drove up sales, yet high freight costs and an inflation-induced demand slowdown pushed down profit margins, according to the electronics maker.

The home appliances business made an operating profit of 228.3 billion won, down 54.5 percent on year and accounting for 30.6 percent of the total. Sales rose 5.8 percent to 7.47 trillion won, thanks to strong demand in the United States and Europe.

LG Electronics expected uncertainty in the market to grow worse through the rest of the year.

“In the fourth quarter, we expect the home appliance demand shrinkage to continue, and therefore competition between the companies will get increasingly stiffer,” said Kim I-kwon, head LG Electronics’ home appliances business management team, during a conference call Friday.

The TV and audio business went into the red with an operating loss of 55.4 billion won, compared to last year’s operating profit of 205.9 billion won. LG Electronics cited declining global TV demand, especially in the European region, caused by the war in Ukraine.

Meanwhile, the vehicle component business swung into the black with an operating profit of 96.1 billion won, from the previous year’s loss of 538 billion won. Sales rose 45.6 percent to 2.34 trillion won thanks to strong demand for cars.

The IT and electronics division reported an operating loss of 14.4 billion won, compared to last year’s operating profit of 41 billion won, due to rising costs. But healthy demand for infotainment systems drove sales to 1.4 trillion won, up 9.7 percent on year.

The company said that it will focus on luxury products while managing inventory levels amid a slowing economy worldwide.

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