LG Electronics flags highest Q2 operating profit in 12 years

LG Electronics Inc. on Wednesday reported a likely 66% jump in its second-quarter operating profit on the back of strong pent-up demand for home appliances amid the prolonged stay-at-home trend.

The South Korean home appliance giant said operating profit for the quarter ending June 30 was likely 1.11 trillion won ($979 million) on a consolidated basis, compared with 672.2 billion won a year ago. If confirmed later this month, it would be LG’s highest operating profit in 12 years for the second quarter.

Revenue for the April-June quarter is estimated at 17.1 trillion won, up 48.4% from 11.5 trillion won in the year-earlier period, LG said in a regulatory filing. The sales figure would represent the company’s largest-ever revenue for the second quarter if confirmed.

Both the operating profit and sales estimates for the second quarter largely came in line with market expectations.

LG Electronics provided no details for the preliminary quarterly results. Final figures, including its net profit, will be announced in the final week of July.

The preliminary results underscore the strong pandemic-led consumer appetite for TVs, washers and other home appliances as they were forced to stay at home for remote work and online learning.

PREMIUM OBJET COLLECTION

Industry officials said LG’s strong second-quarter performance was driven by robust sales at its home appliance and air solution division (H&A) that likely posted more than 6 trillion won in revenue. The division’s profit margin is estimated at close to 10%, they said.

In the first quarter, the company posted record sales and operating profit, boosted by strong sales of a suite of high-class consumer goods sold under the LG Objet Collection brand.

Analysts said LG will likely post its best-ever sales revenue for its home appliance business this year, overtaking Whirlpool Corp. as the world’s top manufacturer of home, kitchen and laundry appliances.

The company is widely expected to post an overall operating profit of more than 4 trillion won on sales of about 70 trillion won for the entire year of 2021.

AUTO PARTS BUSINESS

LG’s vehicle component solutions (VS) division likely posted 1.9 trillion won in sales in the second quarter, up about 1 trillion won from a year ago, analysts said.

The company said in April that its loss-making auto parts business could turn to profit in the latter half of this year at the earliest.

Its home entertainment (HE) business that makes TVs likely posted revenue of more than 4 trillion, the highest in five years, on the back of increased shipments of OLED and other premium TVs. The division’s operating profit is estimated at between 250 billion won and 300 billion won.

Write to Su-Bin Lee at lsb@hankyung.com
In-Soo Nam edited this article.