This file photo taken on April 7, 2021, shows LG Group’s headquarters building, LG Twin Towers, in Seoul. (Yonhap)
SEOUL, July 27 (Korea Bizwire) — LG Electronics Inc. reported a 6.2 percent fall in second-quarter operating profit, primarily due to a one-time provision.
The company said in a regulatory filing that operating income for the April-June period came to 741.9 billion won (US$581 million), down from the 892.7 billion won it had predicted earlier this month.
LG said the second-quarter profit was revised down after including the one-time provision of 151 billion won related to rising materials cost related to General Motors’ recall of the Chevy Bolt EV.
The provision also covered expenses for the voluntary retirement scheme the company ran early this year.
Sales increased 2.7 percent to 19.99 trillion won. Second-quarter net profit came to 195.3 billion won, down 42.2 percent from a year earlier.
The operating profit was 23.8 percent lower than the average estimate, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Except for the one-off costs, LG said it hit record quarterly sales, largely thanks to its efforts to “fundamentally improve its business structure by pursuing new platform-based service businesses and continuously expanding the business-to-business (B2B) segments.”
Its home appliance and air solutions division logged an operating profit of 600.1 billion won, up 40 percent from a year ago, on the back of solid demand for high-end home appliances, air conditioners and energy-efficient heat pump-enabled products.
The electric vehicle (EV) component division reported quarterly sales of 2.66 trillion won, the highest second-quarter revenue in company history. But it logged an operating loss of 61.2 billion won due to the one-time provision of 151 billion won.
LG expected the EV unit’s order backlog “to reach 100 trillion won by the end of the year” amid explosive growth of electric vehicles.
The Seoul-based company has been working to reduce shipping costs and restructure its business portfolio to “preemptively” deal with slowing demand amid global economic uncertainties.
Late last year, it set up what it called a “war room” to actively tackle global economic headwinds. It worked on removing inefficient working practices and focused on core businesses.
LG Electronics CEO Cho Joo-wan speaks at a press conference held at LG Science Park in western Seoul on July 12, 2023. (Yonhap)
LG said such efforts have started paying off.
In the first quarter, LG’s TV business made a turnaround after logging losses for the past three consecutive quarters, on improving TV demand in the European market, LG’s biggest OLED TV market, and decreasing inventory levels and marketing costs.
The home entertainment division also reported an operating profit of 123.6 billion won in the second quarter, compared with an operating loss of 18.9 billion won a year ago.
“As challenging business conditions persist for the worldwide consumer electronics industry, the company continued to focus on improving operational efficiency and improving profitability by growing the content and service businesses based on LG’s webOS smart TV platform,” LG said in a statement.
It plans to “transform its TV business portfolio into a ‘media and entertainment service provider’ by expanding content, services and advertising in differentiated products.”
Earlier this month, LG unveiled a grand plan to turn itself into a total life solutions provider, by focusing on non-hardware products, business-to-business solutions and new growth areas.
Under the new vision, the company plans to increase annual revenue levels to 100 trillion won by 2030, from around 65 trillion won last year.
(Yonhap)
