[Click eStock] LG Electronics Smiled in Q3, Q4 Outlook Also 'Clear'

3Q Operating Profit 959 Billion KRW... Up 22.7% YoY
Strong TV and Premium Sales... Reduced Deficit in Automotive Parts and Mobile Too

[Asia Economy Reporter Minwoo Lee] LG Electronics, which posted solid results in the third quarter of this year, is expected to maintain this momentum into the fourth quarter. It is analyzed that steadily increasing TV demand and sales of premium home appliances such as dishwashers and dryers will drive performance through the end of the year.

On the 2nd, Daishin Securities maintained a 'Buy' rating and a target price of 115,000 KRW for LG Electronics based on this background. The previous trading day's closing price was 84,000 KRW. Earlier, LG Electronics recorded consolidated sales of 16.92 trillion KRW and operating profit of 959 billion KRW in the third quarter of this year. Compared to the same period last year, sales increased by 7.8% and operating profit rose by 22.7%. Net profit for the same period was 649.2 billion KRW, up 87.7%.

Researcher Kangho Park of Daishin Securities explained, "Despite the impact of COVID-19, TV sales volume increased by 75.7% compared to the previous quarter, and sales of premium home appliances such as dishwashers, refrigerators, and dryers increased, resulting in operating profit margins of 8.9% and 10.9% for the TV (HE) and home appliances (H&A) divisions, respectively. The VS (Vehicle Components) division reduced its operating loss from 202.5 billion KRW in the second quarter to 66.2 billion KRW in the third quarter due to a decrease in the proportion of low-profit components and an 81.5% increase in total sales compared to the previous quarter," he said.

Additionally, the mobile (MC) division also reduced its operating loss from 206.5 billion KRW in the previous quarter to 148.4 billion KRW in the third quarter. Smartphone sales increased by 28.6% quarter-on-quarter, centered on mid- to low-priced models in the U.S. and Latin American markets, allowing fixed cost reductions. It is analyzed that the expansion of sales immediately led to profitability improvement after the shift to production in Vietnam and the OEM (Original Equipment Manufacturer) model.

Strong performance is also expected in the fourth quarter. Daishin Securities forecasts LG Electronics to achieve an operating profit of 615.5 billion KRW in the fourth quarter of this year, a 505% increase compared to the same period last year. Researcher Park said, "Although operating profit is expected to decrease quarter-on-quarter due to seasonal off-season marketing cost increases and weakened mix effects in the home appliances and TV divisions, the year-on-year operating profit increase will be positive. The VS division's rebound will continue with the discontinuation of low-profit products and reduction of marketing costs, turning profitable in the third quarter of 2021," he predicted.

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