LG Electronics posts 12% drop in profit on weaker demand

LG Electronics on Friday said its second quarter operating profit declined 12 per cent (on-year) amid inflation hurting consumer demand for TVs and other home appliances.

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

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

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 grow double-digits.

The company had earlier forecast a contraction in its Q2 operating profit on weak demand for TVs and home appliances amid rising inflation and raw material costs.

Analysts suggested less upbeat earnings for LG for the rest of the year, as pandemic-induced demand for TVs lost steam and rate hikes in major economies weakened consumer-spending power to control inflation. has occurred.

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

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

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