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LG Electronics Q2 operating profit drops 12% on weaker demand

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LG Electronics on Thursday it estimated second-quarter operating profit was up 12 percent year-on-year as a result of weaker demand for TV and home appliances amid rising inflation and commodity costs.



The April-June earnings forecast showed the tech company’s operating profit fell 12 percent from a year ago to 791.7 billion won ($610.5 million).

Operating profit was 1.2 percent lower than the median estimate, according to the study by Yonhap Infomax‘s financial data company Yonhap Press Agency

Sales rose 15 percent to 19.47 trillion won. Net income data were not available.

Analysts have suggested LG will see less positive gains for the year to come as pandemic-driven pent-up TV demand has slowed and rate hikes in major economies to contain inflation weakened consumer spending power.

High shipping costs amid supply chain disruptions also hurt bottom line.

The company said Thursday that its TV business shrank in the quarter, with marketing costs rising and people spending less time at home as the COVID-19 pandemic eases.

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

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

The company said the company posted a net profit in the second quarter, with quarterly revenue of more than 2 trillion won.

Earlier this week, LG said it secured $6.1 billion in new orders for electric vehicle (EV) parts and solutions in the first half.

The company expected its total order book to top 65 trillion won by the end of the year, up 8 percent from a year ago.

The company will announce its second quarter results on July 29.

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