[Click eStock] "Consistently Performing TV... LG Electronics Maintains 1 Trillion KRW Operating Profit in 3Q"

MC Division Divested, Strong Performance
Some Slowdown in 3Q Due to Raw Material and Logistics Costs
"Electric Vehicle Sector Growth Expected to Continue"

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] LG Electronics, which posted solid results in the second quarter of this year, is expected to slow down somewhat in the third quarter due to increased costs such as rising raw material and logistics expenses. However, operating profit is projected to remain at around 1 trillion KRW.

On the 30th, IBK Investment & Securities maintained its 'Buy' rating and target price of 220,000 KRW for LG Electronics based on this outlook. The closing price on the previous day was 166,500 KRW.

Excluding LG Innotek, LG Electronics recorded sales of 14.8281 trillion KRW and operating profit of 975.1 billion KRW in the second quarter of this year. This represents an increase of 29.6% and 114.8%, respectively, compared to the same period last year. The MC (smartphone) division was classified as a discontinued business and excluded from sales. Compared to the sales of the second quarter last year excluding the MC division, sales increased by 46.3%.

All business divisions showed significant growth compared to the same period last year. The H&A (home appliances) division's sales increased by 32.2% during this period, reaching 6.8149 trillion KRW. This was largely due to the low base effect caused by a sharp drop in demand following the outbreak of COVID-19 in the second quarter of last year.

The HE (TV) division's sales amounted to 4.0426 trillion KRW, a 79.1% increase compared to the same period last year. OLED TV shipments slightly decreased to 950,000 units, which was below expectations. On the other hand, LCD TV shipments increased by more than 50% compared to the second quarter of last year, reaching 6.7 million units.

The VS (vehicle components) division, considered a future growth engine, also grew significantly. Sales reached 1.8847 trillion KRW, more than doubling compared to the same period last year. This was influenced by a recovery in automobile sales. The BS division, which sells information displays, also saw sales increase by about 30% during the same period, reaching 1.6854 trillion KRW.

The main reason for the operating profit excluding LG Innotek more than doubling compared to the same period last year was the discontinuation of the MC business. Excluding the MC division, operating profit increased by 47.6% compared to the same period last year. The HE division's operating profit also contributed to growth, increasing by 195.5% compared to the second quarter of last year. While H&A and VS divisions improved their results compared to the same period last year, BS saw a decline.

Despite an expected slight deterioration in cost structure in the third quarter, consolidated operating profit is forecasted to remain in the 1 trillion KRW range. Excluding LG Innotek, operating profit is expected to be 770 billion KRW, a decrease of 11.7% compared to the same period last year. Sales on the same basis are projected to increase by 3.0% year-on-year to 15.3586 trillion KRW. Except for the reduction in losses in the VS division, other divisions are expected to see a decline compared to the same period last year. Kim Unho, a researcher at IBK Investment & Securities, said, "Rising raw material and logistics costs in the H&A division, increased panel prices and difficulties in securing parts in the HE division will worsen profitability. However, the VS division's operating losses are expected to improve significantly."

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