SEOUL, Oct. 28 (Korea Bizwire) — LG Electronics Inc. said Thursday its net profit dropped 20.4 percent on-year in the third quarter due to costs incurred in a recall of General Motor’s Bolt electric vehicles.
The South Korean tech giant said in a regulatory filing that net income came to 516.5 billion won (US$440 million) in the July-September, down from 649.2 billion won during the same period of last year.
LG Electronics said the recall of General Motor’s Bolt electric vehicles hurt its bottom line.
LG Electronics said its third-quarter operating profit fell 49.6 percent on-year to 540.7 billion won as it set aside 480 billion won for the recall cost.
The company supplied GM with battery modules that are made with battery cells from LG Energy Solution Ltd. In August, the tech firm revised down its second-quarter profit after setting aside 234.6 billion won for the recall.
LG Electronics said sales reached a record 18.79 trillion won, up 22 percent from a year earlier on strong home appliances and television businesses.
LG’s main cash cow, home appliance & air solution units, maintained its solid performance in the third quarter, as LG Objet Collection products, which offer enhanced customization options, have continued to help rack up sales.
The sector’s sales rose 14.7 percent on-year to 7.06 trillion won, with an operating profit of 505.4 billion won, driven by strong sales growth, particularly in the American and European markets, the company said.
Its home entertainment division that manages the TV business drove strong sales with the popularity of OLED TV, brushing off concerns over increasing logistic and retail costs.
Global OLED TV shipments, led by LG, are projected to reach 6.5 million units by the end of this year, according to a recent report by market researcher Omdia, up from the previous estimate of 5.8 million units.
During an earnings call, the company said it is on schedule for OLED TV shipments for this year and is “confident to achieve” its goal of selling 4 million units by year-end, double last year’s target, despite concern over “slow-down in TV demand globally, uncertainties in the global economy and expansion of the ‘living with COVID-19′ scheme.”
If the goal is achieved, OLED TV will take up 32 percent of the company’s total TV sales and the sector would post 24 percent growth on a year-on-year basis, the company said.
Continued global logistics disruptions are “decreasing our top line revenue by 2 percent on a year-on-year basis, but we are trying to deploy more extra ships in collaboration with global shipping companies,” the company added.
Shares of LG Electronics closed at 122,000 won, unchanged from the previous day, while the broader market fell 0.53 percent.