LG Electronics posts 12% drop in profit on weaker demand

Seoul: LG Electronics on Friday said its second -quarter operating profit decreased 12 per cent (on-year) amid rampant inflation that hurt consumer demand for TVs and other home appliances. Its operating income came in at 792 billion won $609 million for the April-June quarter, falling short of analysts’ expectations surveyed by Yonhap Infomax, the financial […]

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

Its operating income came in at 792 billion won $609 million for the April-June quarter, falling short of analysts’ expectations surveyed by Yonhap Infomax, the financial data firm of Yonhap News Agency.

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Revenue increased 15 per cent from the year-ago quarter to 19.5 trillion won.

LG said its TV business shrank for the three months ending in June, as marketing costs rose and people spent less time at home.

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

The company had earlier estimated decrease in its second-quarter operating profit on weaker demand for TV and home appliances amid rising inflation and raw material costs.

Analysts suggested less upbeat earnings for LG for the remaining year, as pandemic-driven pent-up demand for TV has lost steam and rate increases in major economies to control inflation weakened consumer-spending power.

Also, high shipping costs amid supply chain disruptions are hurting the company’s bottom line.

LG’s electric vehicle (EV) components business has greatly improved performance on growing demand from customers, which include Mercedes-Benz AG and General Motors, and increased profitability.

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