LG Electronics Q3 profit down on weak demand

Seoul: LG Electronics on Friday reported record high sales backed by its electric vehicle (EV) components business but also experienced a big drop in net income in the third quarter on sluggish demand for consumer electronics amid high inflation and recession fears.

The South Korean tech company reported in a regulatory filing that its third-quarter net income came in at 336.5 billion won ($237.1 million), down 34.8 per cent from a year earlier.

Operating income for the July-September period was 746.6 billion won, up 25.1 percent from a year ago, the company said.

But LG’s quarterly profit, in fact, declined on-year after taking into consideration a recall provision of 480 billion won for General Motors’s Bolt electric vehicle during the year-ago quarter, reports Yonhap news agency.

Sales increased 14.1 per cent to hit a record high of 21.17 trillion won, surpassing the 20 trillion-won mark for the first time in the company’s history, on the back of robust sales of high-end home appliances and electric vehicle (EV) components business, it said.

Its home appliance division reported sales of 7.5 trillion won, up 5.8 percent from a year ago, with an operating profit of 228.3 billion won, which declined year-on-year due to “increased marketing investments and higher logistics costs.”

LG’s TV business logged an operating loss of 55.4 billion won due to bigger marketing expenses amid intensified market competition and high logistics costs.

Its EV business reported 2.3 trillion won in sales, up 45.6 percent from a year ago, marking the business unit’s highest quarterly revenue. Operating profit came in at 96.1 billion won.

LG said in a statement a rise in sales of its EV business was attributed to the company’s proactive response to “higher demand from automakers with efficient supply chain management.”

The EV business is expected to turn to a profit for the year for the first time since the company entered the market in 2013, on robust demand amid the gradual easing of the auto chip shortage and a subsequent rise in auto production.

Like many other tech firms, however, continued macroeconomic woes paint a gloomy picture for LG’s bottom line for the remainder of the year and into next year.