LG Electronics sees operating profit decrease to $580M

LG Electronics introduced its rebranded logo at electronic displays at the IFC Mall in Yeouido, western Seoul, on May 10. [NEWS1]

LG Electronics reported a 6.3 percent decrease in operating profit on year to hit 741.9 billion won ($580 million) in the April-June period, primarily due to one-time costs.

The figure was below the market consensus of 963.6 billion won compiled by FnGuide, and also less than what the company announced in its preliminary guidance on July 7.

The company said that the quarterly profit dipped due to one-off costs, including a 151 billion won provision related to General Motors’ recall of the Chevy Bolt electric vehicle and expenses from a voluntary retirement program earlier this year.

Company sales surged 2.7 percent to 20 trillion won in the second quarter, exceeding a market estimate of 19.8 trillion won.

Net profit in the second quarter dropped by 42.2 percent to 195.3 billion won, far below the market consensus of 398 billion won.

The Home Entertainment division, which deals in TVs, saw its operating profit turn profitable to 123.6 billion won due to lowered panel prices. Sales fell 9 percent to 3.15 trillion won amid a delayed recovery in global TV demand.

“Shrinking demand is due to retracting consumer sentiment as inflation is prolonged and consumers become more sensitive to prices,” the company said.

It aims to revamp its TV business by focusing on content platforms and advertisement proceeds, breaking away from the conventional TV manufacturer mold.

Home Appliance & Air Solution, which covers air conditioners, refrigerators and washers, posted an operating profit of 600.1 billion won, up 38 percent on year. Sales fell 1 percent to 7.99 trillion won.

Global consumer sentiment weakened amid the economic slowdown, but the division improved thanks to its efforts to manage material and logistics costs efficiently.

The Vehicle Solutions division for automotive parts turned to an operating loss of 61.2 billion won due to the one-time cost of 151 billion won. Sales increased 31 percent to 2.66 trillion won.

“The current order backlog totals 80 trillion won, and we anticipate that the figure will reach 100 trillion won by the end of this year,” the company said at the conference call, riding on the popular EV demands. “Infotainment is 60 percent of the order, while the rest is EV parts.”

The electronics maker also plans to release products related to EV charging from the third quarter and is “planning to enter the North American market by 2024.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]