LG reports second drop in profits this year for Q3

  • LG has reported that its quarterly profits have dropped again despite record revenues.
  • In Q1 2022, the company reported an operating profit of 28.6 billion. This quarter saw profits of over R9.5 billion.
  • The company’s home entertainment business reported an operating loss of R700 million in Q3 which could be attributed to the drop in global market demand affecting the industry.

LG Electronics Inc. (LG) has today announced its third-quarter results for 2022.

The South Korean electronics group is claiming to have seen the highest quarterly revenue in the history of the company making over R270 billion (KRW 21.2 trillion) in the quarter, an increase of 14.1 percent from the same quarter last year.

However, these record revenues have been offset by increased spending within the company. Operating profit (the money the company is actually making before taxes) for the third quarter was around R9.5 billion (KRW 746.6 billion), 25.1 percent higher than the same quarter last year but lower overall than second quarter 2022 which saw operating profits of ~R10.1 billion (KRW 792.2 billion).

This third quarter marks the second time LG is reporting a drop in operating profits this year. In Q1 the company raked in R28.6 billion (KRW 1.88 trillion) in profits. A sharp drop compared to this quarter’s profit of R9.5 billion.

In a press release sent to Hypertext, LG says that its record revenues for this quarter were driven by increased sales of premium home appliances including new appliance categories and automotive parts. However, considering one-off costs incurred last year, the company’s operating profit saw a decline due to “weak demand caused by the global economic slowdown.”

Fellow Korean tech titan Samsung also saw its recent profits wracked by the global market conditions, specifically the chip crunch that is affecting the industry.

In terms of its businesses, LG’s aircon and appliances unit was the company’s banner carrier for the quarter, reaping revenues of over R96 billion (KRW 7.5 trillion) in the third quarter, an increase of 5.8 percent from the same quarter last year, recording the highest third-quarter revenue ever for the business unit.

The revenue increase was driven by strong sales of appliances including new appliance categories such as hygiene products using steam technology in the key regions of North America and Europe.

The unit’s operating profit of over R2.9 billion (KRW 228.3 billion) was lower than last year due to increased marketing investments and higher logistics costs. LG says the business unit plans to continue its momentum by improving the “competitiveness of premium products” through strengthening its mass-tier lineup, along with the management of the unit’s costs to enhance profits.

LG’s Home Entertainment Company which oversees its TVs and speakers business recorded an operating loss of over R700 million (KRW 55.4 billion) in the third quarter, which reflected higher marketing investments in response to intensified market competition despite revenues of over R47 billion (KRW 3.7 trillion). This loss corresponds with the decline in consumer spending being seen across the industry.

To manage this loss, the unit says it wants to boost its TV segment and focus on effectively managing marketing expenses.

Next up, LG’s Vehicle component Solutions Company achieved third-quarter sales of over R29 billion (KRW 2.3 trillion), a 45.6 percent increase from the same period in 2021, marking the business unit’s highest quarterly revenue.

This unit managed operating profits of over R1.2 billion (KRW 96.1 billion). The significantly higher sales were driven by the company proactively responding to higher demand from automakers with efficient supply chain management. Supply chains across the industry have struggled to return to normal since the COVID-19 pandemic.

Finally, the LG Business Solutions Company also recorded an operating loss of over R184 million (KRW 14.4 billion) caused by higher raw material costs and increased global logistics costs.

Business Solutions saw revenues for the third quarter of R17.9 billion (KRW 1.4 trillion), a 9.7 increase from last year, largely on the back of the recovery of LG’s B2B segment.


About Author


Related News