Tuesday, 24 June 2025

LG estimates Q3 profit growth of 25% Y/Y

LG Electronics announced today, Friday, that its preliminary operating profit for the third quarter jumped about 25% from the previous year.

According to Korea’s Yonhap Agency, the technology company said its profit for the July-September period is expected to reach 746.6 billion won ($529 million), up 25.1% from 540.7 billion won over the same period last year.

But LG’s quarterly profit fell year on year, after taking into account compensation worth 480 billion won for General Motors’ Bolt electric cars, due to faulty LG batteries, which led to a recall of its car during the same quarter last year.

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Sales are estimated to increase 14% to a record 20.9 trillion won, breaking the 20 trillion won mark for the first time in the company’s history, on the back of strong sales of high-end home appliances and electric vehicle (EV) components.

The faltering economic conditions present a bleak picture of the bottom line for LG for the fourth quarter of this year and next year, like many other electronics manufacturers.

Previously, the pandemic-improved demand for household appliances, including televisions, has declined, and interest rates have been significantly increased in major countries to control inflation, which has weakened the purchasing power of consumers. Rising freight costs amid supply chain disruptions are expected to continue to hurt the company’s performance.

During the three months to the end of June, LG’s home entertainment division posted an operating loss of 18.9 billion won, turning into a first-time loss of 28 quarters, with higher marketing costs and less time at home.

However, LG’s electric vehicle components business is likely to turn profitable this year for the first time since the company entered the market in 2013, with demand rising amid the gradual easing of the auto chip shortage crisis and the subsequent rise in vehicle production.

The division posted an operating profit of 50 billion won in the second quarter, posting a profit for the first time since 2013, with the exception of the fourth quarter of 2015.

In the first half of the year, LG secured 8 trillion won in new orders for electric vehicle parts and solutions, and the company expects backlog demand to reach 65 trillion won by the end of the year, up 8 percent from last year.

The electric car division appears to have averaged more than 2.2 trillion won in sales for two consecutive quarters thanks to “improving profitability and growing demand from global automakers,” said analyst Kim Dong-won of KB Securities.

LG Electronics shares rose 1.45% to close at 76,800 won on Friday, against a market loss of 0.22%.

The company will announce its third-quarter earnings results at the end of this month.

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