LG Electronics Surpasses Samsung Electronics in Operating Profit 'Again'... Positive Outlook for Second Half (Comprehensive)

Samsung Electronics Operating Profit Leads for Two Consecutive Quarters
Home Appliances and Automotive Electronics Drive Growth

LG Electronics achieved its highest-ever sales for the second quarter. Operating profit also reached nearly 900 billion KRW, marking the second-best performance in history. Following a strong first quarter, LG Electronics surpassed Samsung Electronics in operating profit for two consecutive quarters.

Record Second Quarter Sales... Operating Profit Includes One-Time Costs

On the 7th, LG Electronics announced its preliminary results for the second quarter of this year, reporting consolidated sales of 19.9988 trillion KRW and operating profit of 892.7 billion KRW. Compared to the same period last year, sales increased by 2.7% and operating profit by 12.7%, respectively.

The first half combined results showed sales of 40.4147 trillion KRW and operating profit of 2.3901 trillion KRW. Sales exceeded 40 trillion KRW for two consecutive years, and operating profit surpassed 2 trillion KRW for three consecutive years. These figures represent the second-highest sales and the third-highest operating profit in the first half historically.

However, while second-quarter sales exceeded market expectations, operating profit fell short. According to FnGuide, a financial information firm, the consensus for LG Electronics' second-quarter results (average forecast by securities firms) was sales of 19.7204 trillion KRW and operating profit of 977.9 billion KRW. This discrepancy is due to one-time costs related to voluntary retirement and other factors. An LG Electronics representative explained, "Considering that the announced second-quarter preliminary results include non-recurring costs related to human resource restructuring (such as voluntary retirement), the operating profit based on business performance exceeds market expectations."

Photo by Yonhap News

Surpassed Samsung Electronics in Operating Profit Again... "Summer Appliances and Automotive Sector Effects"

LG Electronics surpassed Samsung Electronics in operating profit again in the second quarter, following the first quarter. In the first quarter, LG Electronics recorded operating profit of 1.4974 trillion KRW, while Samsung Electronics posted 640.2 billion KRW. Samsung Electronics announced its preliminary results on the morning of the same day, reporting second-quarter sales of 60 trillion KRW and operating profit of 600 billion KRW. This marked Samsung's worst performance since the 2009 global financial crisis.

Proactive inventory adjustments in home appliances and TVs, sales focused on premium products, and cost improvement strategies proved effective. Additionally, increasing the proportion of business-to-business (B2B) transactions, such as in the automotive sector, contributed to better-than-expected results.

In home appliances, sales of high-efficiency products like dehumidifiers and air conditioners increased due to ongoing heatwaves and monsoon forecasts this year. Dehumidifier sales in the first half of this year more than doubled compared to the same period last year. For home air conditioners, LG responded to diversified customer demand with competitive products in various forms, including stand, wall-mounted, window, and portable types. Sales of window-type air conditioners increased by more than 40% compared to the same period last year. Growth also continued in the B2B air conditioning business, with system air conditioners recording double-digit sales growth compared to the previous year.

Despite continued global demand downturns in the TV business, the webOS content and service business achieved meaningful growth. New lifestyle screen products such as the LG StanbyME Go were also newly launched and received positive responses.

The automotive sector continued rapid growth through a high order backlog and stable supply chain management. The market estimates LG Electronics' automotive order backlog to be around 100 trillion KRW this year. The business solutions division is also accelerating the expansion of customer experiences into various spaces, recently introducing the industry's first hotel TV equipped with Apple AirPlay.

Quarterly Performance Trends of LG Electronics. [Provided by LG Electronics]

Positive Outlook for Second Half... Growing Expectations for LG Magna

The outlook for the second half remains positive. Demand for seasonal appliances such as air conditioners and dehumidifiers is expected to increase due to climate factors like El Ni?o. The full-scale operation of the electric vehicle parts production plant in Mexico is scheduled for the second half, raising expectations for the growth of LG Electronics' automotive joint venture, LG Magna e-Powertrain.

Kim Ji-san, a researcher at Kiwoom Securities, predicted, "e-Powertrain will attempt to turn a profit this year and maintain an annual sales growth rate of 50% for the foreseeable future."

Meanwhile, the announced second-quarter preliminary results of LG Electronics are estimates based on Korean International Financial Reporting Standards (K-IFRS). LG Electronics plans to disclose second-quarter consolidated net profit and performance by business division at an earnings conference scheduled for the end of this month.

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