LG set to post strong Q2 earnings on home appliance business

The South Korean tech company was projected to log 17.6 trillion won (US$15.5 billion) in sales in the April-June period, up 37 percent from a year earlier, while its operating profit was estimated

Seoul: LG Electronics is likely to report strong second-quarter earnings, analysts said on Friday, as its mainstay home appliance business continued to rack up solid results.

The South Korean tech company was projected to log 17.6 trillion won (US$15.5 billion) in sales in the April-June period, up 37 percent from a year earlier, while its operating profit was estimated to soar 140 percent on-year to 1.2 trillion won over the period, according to the data from seven local brokerage houses compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency.

But compared with the first quarter, when the company posted its largest-ever quarterly earnings, LG’s second-quarter sales and operating profit were expected to be down 6.5 percent and 21.4 percent, respectively.

LG will release its second-quarter earnings guidance next week.

Analysts said the home appliance business once again paved the way for LG’s robust performance in the second quarter with strong sales of air conditioners.

They forecast LG’s home appliance and air solution (H&A) unit to log operating profit of around 700 billion won.

“With expanded overseas sales of steam and new products, the company could see its best performance in North America,” Cha Yu-mi, an analyst at MiraeAsset Securities, said.

LG’s home entertainment (HE) unit, which manages its TV business, was also predicted to deliver solid earnings despite a rise in LCD panel prices. Analysts predicted the HE unit to report operating profit of around 300 billion won.

“Despite the LCD panel price hike, the unit is expected to report a healthy operating margin with increase of OLED TV sales,” Noh Kyung-tak, an analyst at Eugene Investment Securities, said. “LG’s second-quarter OLED TV shipment is estimated be around 943,000 units, up 198 percent from a year ago.”

Analysts predicted LG’s vehicle component solutions (VS) unit to stay in the red in the second quarter with its operating loss widened from the first quarter, as the global auto industry saw production disruptions over semiconductor shortages.

They expected the VS unit to post operating loss of around 70 billion won in the second quarter.

As previously announced, results of the mobile communications (MC) unit will be reported in discontinued operations on the company’s second-quarter income statement after the company decided to exit the smartphone business by July.

Analysts said LG is expected to keep up its robust earnings in the second half of the year, although there are still concerns that demand for home appliances and TVs may go down after the pandemic.