LG Electronics sees decent growth in US home appliance business

South Korea’s LG Electronics Inc. expects to post significant revenue growth in its home appliance business in the second quarter, driven by pent-up consumer demand, particularly in the US market.

The Korean home appliance giant is widely expected to post a quarterly operating profit of 1.12 trillion won ($990 million) on revenue of 17.1 trillion won on a consolidated basis when the company reports its second-quarter results on Wednesday, up 126% and 33%, respectively, from a year ago.

If its second-quarter profit comes in line with the market consensus, that would be the first time the company has run an operating profit above the 1 trillion won mark for a second consecutive quarter. In the first quarter, LG posted 1.52 trillion won in operating profit.

The company’s handsome growth derives mostly from robust sales overseas, particularly in the US market, according to industry officials.

In the first quarter, LG’s overall revenue reached 10.81 trillion won, and 40% of which, or 4.29 trillion won came from the US market.

“The booming housing market in the US where young Americans sought to buy new dwelling places in the prolonged work-from-home and online learning environment has led to an increase in demand for new home appliances,” said an LG Electronics official.

In the entire year of 2020, the company’s home appliance and air solution division (H&A) reported 22.27 trillion won in global sales, up 3.5% from the previous year. In the US market alone, LG’s home appliance sales increased 19% on year to about 6 trillion won.

PLANT RAMP-UP IN US MARKET

With the global economy recovering fast from the pandemic, LG has been ramping up production plants in four of its major markets, including the US, to meet rising demand.

In the US, one of LG’s largest overseas markets, the company said it is spending $20.5 million to ramp up capacity at its washing machine plant in Tennessee.

The expansion at the plant with an annual production capacity of 1.2 million washers comes after the company posted double-digit sales growth in the North American market over the past few years.

LG is also expanding its plant in Mexico to produce more refrigerators and microwave ovens to be shipped to the US market.

Analysts said LG will likely post its best-ever sales revenue for its home appliance business this year, overtaking Whirlpool Corp. as the world’s top manufacturer of home, kitchen and laundry appliances.

The company posted record overall sales and operating profit in the first quarter of this year, boosted by strong sales of a suite of high-class consumer goods sold under the LG Objet Collection brand.

Write to Shin-young Park at nyusos@hankyung.com
In-Soo Nam edited this article.