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Business

LG Electronics feels the brunt of weak consumer demand in third-quarter earnings

Its operating profit increased 25% from a year ago but last year's earnings included a one-off cost from General Motors' recall of electric vehicles.
Written by Cho Mu-Hyun, Contributing Writer on

LG Electronics recorded a profit increase for the third quarter this year but the company warned that it was an effective decline from the weak demand caused by the global economic slowdown.

The South Korean electronics maker said its operating profit increased 25.1% year-on-year to 746.6 billion won. However, last year's third quarter operating profit was already low as it reflected the 480 billion won it had to shoulder for General Motor's recall cost. LG Electronics supplies the separators used in LG Energy Solution's batteries used by the US car giant in their electric vehicles.

LG Electronics said this meant that its third-quarter operating profit should be considered a decline caused by the global economic slowdown.

Its profitability from sales of its consumer products such as home appliances and TVs has dropped significantly compared to the high it enjoyed during the pandemic from increased raw material prices and logistics costs while inflation had dampened consumer spending.

LG Electronics' home appliance business unit contributed 228.3 billion won in operating profit, a significant drop from last year which it attributed to marketing and logistics costs. Its TV business unit recorded an operating loss of 55.4 billion won from low TV demand which is also affecting other TV makers such as Samsung. The loss is steeper than the previous quarter when it recorded its first operating loss in years at 18.9 billion won.

However, revenue increased by 14.1% from a year ago and it was the highest quarterly revenue in the history of the company, the South Korean electronics maker noted. This was thanks to increased sales of its premium home appliances and automotive parts, the company explained.

LG Electronics' vehicle component business unit also recorded an operating profit of 96.1 billion won and revenue of 2.3 trillion won __ a jump of 45.6% from a year ago. Automakers were showing higher demand for parts and the company proactively responded to this, LG Electronics said.

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