"The Power of Premium Appliances"... LG Electronics 2Q Earnings Expected to Improve

2Q Consensus Sales Up 33%, Operating Profit Up 126%
Profitability Maintained by Increasing Premium Product Share
Notable Achievement: Surpassing Whirlpool to Rank 1 in Annual Home Appliance Sales
2Q High-End OLED TV Shipments Expected to Surge 198%

[Asia Economy Reporter Suyeon Woo] LG Electronics, which recorded the highest quarterly performance in history in the first quarter of this year, is expected to achieve record-breaking results in the second quarter as well, driven by strong sales of premium home appliances. While pent-up demand caused by COVID-19 continues, increasing the proportion of premium product sales is expected to completely dispel concerns in the set (finished product) industry caused by semiconductor supply shortages.

According to FnGuide on the 6th, LG Electronics' consensus for the second quarter of this year forecasts sales of 17.1049 trillion KRW and operating profit of 1.1229 trillion KRW. These figures represent increases of 33.2% and 126%, respectively, compared to the same period last year. LG Electronics is expected to continue its strong performance in the second quarter following the record-breaking quarterly results in the first quarter (sales of 18.8095 trillion KRW and operating profit of 1.5166 trillion KRW).

Compared to the first quarter, sales are expected to decrease by more than 1 trillion KRW, but profitability (operating profit) is expected to be maintained at a similar level through a strategy of increasing sales of high-priced premium products. Demand for new growth home appliances such as dryers, stylers, and dishwashers remains steady, and the second quarter marks the beginning of the peak season for summer seasonal appliances like air conditioners, which also raises expectations for performance.

Looking solely at the performance of the H&A (Home Appliance & Air Solution) division, which handles home appliances, there is speculation that LG Electronics will rank first in the global home appliance industry again in the second quarter, surpassing the American appliance company Whirlpool, following the first quarter. The industry expects the H&A division's sales in the second quarter to be in the high 6 trillion KRW range, with operating profit in the low 800 billion KRW range, while Whirlpool's estimated sales for the same period are around 5 billion USD (5.6 trillion KRW). LG Electronics has outperformed Whirlpool in operating profit since 2017, and this year, industry attention is focused on whether LG can also surpass Whirlpool in annual sales.

Additionally, the HE (Home Entertainment) division, which is performing well thanks to the success of OLED TVs, is expected to contribute to improved results. Despite rising raw material costs due to shortages of display panels and semiconductors, the TV business is expected to record favorable profitability by increasing the proportion of premium products such as OLED, NanoCell, and large-sized TVs. Industry forecasts for LG Electronics' second-quarter OLED TV shipments are about 943,000 units, a 198% increase compared to the previous year.

Meanwhile, from the third quarter, significant profit growth is expected with the launch of 'LG Magna Powertrain,' which will lead the automotive components business simultaneously with the termination of the smartphone business. The MC (Mobile Communications) division's results, which will end at the end of July, will no longer be reflected in operating profit from the second quarter and will be accounted for as discontinued operation losses, while the VS (Vehicle Components) division is expected to turn profitable as early as the third quarter. As LG Electronics reorganizes its underperforming mobile business and focuses on the automotive components business that will lead its future, market expectations for LG Electronics are anticipated to change significantly from the second half of the year.

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