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Earnings

LG Electronics posts record-high Q3 sales, operating profit

Oct 30, 2020 (Gmt+09:00)

LG Electronics Inc.’s quarterly operating profit and sales surged thanks to solid growth in its television and home appliance segments and smaller smartphone losses.

The South Korean consumer electronics giant said on Oct. 30 its third-quarter operating profit rose 23% on a year-on-year basis to 959 billion won ($829 million). Revenue increased 7.8% from the same period a year earlier to 16.92 trillion won.

The results were in line with its estimates announced earlier this month and mark the company’s highest revenue and operating profit for any third quarter.

Net income nearly doubled to 649.2 billion won from 345.7 billion won a year earlier.

OLED TV produced by LG Electronics

Market analysts say if the uptrend continues for the rest of the year, LG Electronics is likely to post more than 3 trillion won in full-year operating profit for 2020, an all-time high for the company.

TRADITIONALLY OFF-SEASON

The third quarter is traditionally an off-season for home appliances makers, meaning weak earnings for LG. But this year, longer periods at home and government subsidies to ease COVID-19 pandemic-caused economic difficulties are driving demand for home appliances and TVs.

Revenue from its home alliance division rose 15.5% on year to a record 6.2 trillion won in the July-September period. The division’s operating profit was 671.5 billion won, with its profit margin rising to 10.9%, the highest for any third quarter.

Robust sales of more profitable large-sized OLED TVs — since LG’s OLED TV plant in Guangzhou, China began operations in July — also contributed to the company’s stellar TV segment performance.

Its home entertainment division, which makes OLED TVs, logged 3.67 trillion won in sales, up 14.3% from the year-earlier period.

According to market researcher TrendForce, LG was the worlds second-largest TV vendor in the third quarter, with its shipment of 7.94 million units. The global OLED TV market is forecast to nearly double to 1.2 million units in the fourth quarter of this year from the first quarter, according to industry tracker Omdia.


NARROWING PHONE BUSINESS LOSSES

LG’s struggling mobile business has narrowed losses with increased smartphone sales, benefiting from US restrictions on Chinese tech firm Huawei Technologies Co.

Its mobile communications division posted an operating loss of 148 billion won, compared with a loss of 206.5 billion won in the second quarter and a shortfall of 161.2 billion won in the third quarter of last year. LG’s mobile business has been in the red since the second quarter of 2015.

LG Electronics is widely expected to report stronger results in the final quarter of this year, when demand for home appliances usually rises ahead of the year-end holiday season.

“Uncertainties remain with the resurgence of the coronavirus in many countries. But we expect the non-contact business and work environment to create new opportunities for us,” LG Electronics said in a statement.

Write to Jeong-Soo Hwang at hjs@hankyung.com

In-Soo Nam edited this article.

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