SEOUL, July 7 (Korea Bizwire) – LG Electronics Inc. on Tuesday delivered market estimate-beating second-quarter earnings as its home appliance business apparently performed better than expected amid the novel coronavirus pandemic.
In its earnings guidance, South Korea’s No. 2 electronics firm estimated its operating profit to be 493.1 billion won (US$412 million) for the April-June period, down 24.4 percent from a year ago.
The figure, however, was higher than the market consensus of 435 billion won in operating profit in the survey conducted by Yonhap Infomax, the financial arm of Yonhap News Agency, on 10 Korean brokerage houses.
LG expected its second-quarter sales to be 12.8 trillion won for the three-month period, down 17.9 percent from a year earlier.
The figure was slightly lower than the median estimate of 13.1 trillion won.
LG, the world’s leading OLED TV maker, did not break down performances of its respective business divisions, saying it will announce the detailed earnings later this month.
All of LG’s business divisions were expected to suffer a drop in their second-quarter earnings as the pandemic swept across advanced markets like North America and Europe and led to shutdowns at its manufacturing plants, analysts here said.
LG’s home appliance business, however, was projected to post a relatively sound performance compared with other home appliance makers due to solid demand on the home turf.
“The domestic market is estimated to make up 36 percent of its total revenue from its home appliance business,” said Ko Jung-woo, an analyst at NH Investment & Securities. “It could make up some of the losses from overseas.”
Analysts also expected a setback in LG’s TV shipment in the second quarter, but its shipment decline may not be sharper than expected as major economies have started to lift their coronavirus lockdowns.
LG’s mobile and vehicle component solution businesses were estimated to stay in the red.
Analysts said LG’s mobile business is likely to post an operating loss for 21 consecutive quarters, although it may have narrowed its loss on reduced fixed costs.
LG’s vehicle component solution unit was projected to see its operating loss widen as global auto sales suffered severely from the pandemic.
LG, however, was forecast to make a rebound in the second half as demand for home appliance and TV products is likely to increase as major economies introduced stimulus measures to boost consumer spending.
“Sales of its premium home appliance products, such as dryers and dishwashers, are to see solid growth,” said Park Kang-ho, an analyst at Daishin Securities.
“Its TV business is estimated to improve its profitability, while its vehicle solution unit is expected to reduce its operating loss.”
Shares in LG Electronics plunged 3.82 percent to close at 65,500 won on the Seoul bourse, underperforming the broader KOSPI’s 1.09 percent drop. The earnings guidance was released before the stock market closed.