LG Electronics posts 12% drop in profit due to weaker demand

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Published: updated on – 15:46, Thu – 4 Aug 22

Seoul: LG Electronics said Friday its second-quarter operating profit fell 12% (year-on-year) amid runaway inflation that hurt consumer demand for TVs and other home appliances.

Its operating profit was 792 billion won $609 million for the April-June quarter, below analysts’ expectations polled by Yonhap Infomax, the financial data firm of Yonhap News Agency. .

Revenue rose 15% from the year-ago quarter to 19.5 trillion won.

LG said its TV business declined in the three months to June as marketing costs rose and people spent less time at home.

While overall consumer demand declined, the company said high-end home appliances were still in high demand, especially in North America, and continued to generate double-digit growth.

The company had previously estimated a decline in second-quarter operating profit due to weaker demand for televisions and home appliances amid rising inflation and rising raw material costs.

Analysts suggested less optimistic earnings for LG for the remaining year as pent-up TV demand due to the pandemic faltered and rate hikes in major economies to control inflation weakened the power of consumer purchase.

Additionally, high shipping costs due to supply chain disruptions are hurting the company’s bottom line.

LG’s electric vehicle (EV) components business has significantly improved its performance due to growing customer demand, including Mercedes-Benz AG and General Motors, and increased its profitability.

LG secured $6.1 billion in new orders for electric vehicle (EV) parts and solutions in the first half.

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