[Click eStock] "LG Innotek, Solid Q2 Performance... Outlook for Improved Results in Second Half"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment viewed LG Innotek as having performed relatively well in the second quarter of this year despite the impact of the novel coronavirus disease (COVID-19), and forecasted a significant improvement in performance in the second half of the year.

LG Innotek recorded sales of 1.5399 trillion KRW in the second quarter of this year, a 1.2% increase compared to the same period last year, and an operating profit of 42.9 billion KRW, up 128.7%.

Seongryul Kwon, a researcher at DB Financial Investment, stated in a report on the 23rd, “Considering the significant decrease in smartphone shipments by customers in the second quarter due to the COVID-19 impact and the fact that first-quarter pre-orders were reflected in advance, the second-quarter performance was relatively solid.” He added, “Although sales of optical solutions dropped 30% to 929.6 billion KRW compared to the previous quarter, the atmosphere in the latter part of the quarter improved significantly compared to early-quarter concerns of a decline exceeding 40%. The substrate materials division maintained high profitability, while the automotive components division suffered a relatively large loss, enduring a difficult period.”

The performance in the second half of the year is expected to improve significantly. Researcher Kwon predicted, “The launch of high-end models by overseas strategic customers is likely to be delayed by about a month, so LG Innotek’s performance pattern will differ from the past. The third quarter will see improvement but will be modest compared to previous years, while the fourth quarter is expected to achieve record-high results.” He continued, “In the third quarter, all business divisions except LED are expected to improve, and the effect of new optical solution models will largely be deferred to the fourth quarter, with an operating profit of 90.3 billion KRW anticipated for the third quarter. In the fourth quarter, pent-up demand will explode and additional optical solution items will be added, leading to an expected operating profit exceeding 300 billion KRW.”

This content was produced with the assistance of AI translation services.