LG Electronics posts record revenue for second quarter
South Korea’s LG Electronics on Friday announced record second-quarter and first-half revenues with consolidated sales of 15.63 trillion won (Bt412 billion) and operating profit of 652.3 billion won for the second quarter of 2019.
Compared to the same period last year, sales were 4.1 per cent higher with operating income down 15.4 per cent. Record home appliance profits and strong business solutions profitability offset smaller operating income for home entertainment products and losses from vehicle components and mobile communications.
The LG Home Appliance & Air Solution Company reported record sales of 6.1 trillion won in the second quarter, the highest for the business unit in the history of LG Electronics. Revenue growth was especially strong in Korea and regions such as North America, Europe and the Middle East, increasing 16.1 per cent from the second quarter of 2018. Operating income of 717.5 billion won was the highest ever for the April-June period. The business unit recorded strong profitability on the back of stable growth, increased sales of high demand products such as air conditioners and continuous cost reduction activities.
The LG Home Entertainment Company generated second-quarter revenues of 3.67 trillion won, a decrease of 4.5 per cent from the same period the previous year due to a decline in demand in regions such as Europe and Latin America where major sporting events in the second quarter of 2018 generated strong sales. Operating income of 205.6 billion won declined from the previous quarter due to higher investments in light of greater competition in key markets and exchange rate depreciation. The business unit expects to see a growth in demand in premium products such as OLED TVs, NanoCell TVs and large-screen Ultra HD TVs next quarter.
The LG Mobile Communications Company recorded second-quarter 2019 sales of 1.61 trillion won, 21.3 per cent lower than the same period last year due to stagnant demand in the smartphone market and continued aggressive pricing by Chinese brands. Sales increased 6.8 per cent from the first quarter but the business united reported an operating loss of 313 billion won as a result of higher marketing investment to support the launch of new models and additional costs related to relocating smartphone production to Vietnam. The introduction of competitive mass-tier smartphones and growing demand for 5G products are expected to contribute to improved performance in the third quarter.
The LG Vehicle Component Solutions Company posted quarterly revenues of 1.42 trillion won, an increase of 63 per cent from the second quarter last year. Strong sales of infotainment products and an increase in demand for electric vehicle components resulted in the stronger sales. An operating loss of 55.8 billion won was primarily due to initial production expenditures related to the ramp up of new projects and delays in setting up manufacturing of new applications such as centre information displays (CID). In the quarters ahead, the company will focus on stabilizing the supply of components to major customers and prioritising cost reductions related to new projects.
The LG Business Solutions Company reported second-quarter sales of 675.5 billion won, 14.8 per cent higher than the same quarter the previous year and 8 per cent higher than the previous quarter due to greater demand for LED and OLED commercial display products and solar panels in Europe and the United States. Operating income of 58.1 billion won was 49 per cent higher year-on-year and 4.7 per cent higher quarter-on-quarter mostly through improved efficiencies in cost and productivity. Growth in both information displays and solar modules are expected to remain strong, the company said.