LG Group headquarters in Yeouido, western Seoul (Newsis)
LG Electronics on Tuesday expected its third-quarter sales to reach an all-time high of 22.17 trillion won ($16.5 billion), outpacing an earlier market consensus of 21.77 trillion won.
But its operating profits during the same period were estimated to have plunged nearly 21 percent to 751.1 billion won from a year ago, largely due to rising logistics and marketing costs.
The earnings guidance was far lower than market expectations. FnGuide, a local market intelligence firm, projected the company’s third-quarter operating profit to record 1.02 trillion won.
Tuesday's guidance did not include the earnings of each business division.
Market watchers expect its H&A division, responsible for home appliances, to have earned around 500 billion won in operating profit for the third quarter.
The subscription business, which combines products and services, is also showing growth, they analyzed.
“Sales growth continues to be effective in the first half of the year, and the expansion of price coverage products is expected to drive performance growth,” said Oh Kang-ho, an analyst at Shinhan Securities.
“In particular, sales of home appliance subscription services are expected to increase by 60 percent this year, following a 33 percent increase last year,” he added.
The vehicle system division is expected to have generated an operating profit between 86 billion and 118 billion won, according to market analysts.
“Although LG Magna e-Powertrain has been somewhat affected by the slowdown in demand for electric vehicles, we are continuing to supply orders worth 100 trillion won without disruption,” an LG Electronics official said.
The HE division, which oversees the TV business, is predicted to have posted an operating profit of around 100 billion won.
The company will announce details of its quarterly earnings later this month.
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