LG Electronics said Tuesday it expected its third quarter operating earnings for 2023 to climb 33.5 percent from a year before, amid the strong performance of its home appliance and vehicle component solutions units.
LG estimated that its operating profit for the July-September period came in at 996.7 billion won ($738 million), compared with 746.6 billion won a year ago, according to the company’s earnings guidance.
The home appliance maker’s earnings guidance for the July-September period has far exceeded market expectations. The FnGuide, a local market intelligence firm, projected the company’s third-quarter operating profit to record 808.4 billion won.
It would also be the second-highest third-quarter record for the company, following 1.07 trillion won in 2020.
Sales were expected to have decreased 2.2 percent on-year to 20.71 trillion won, marking the second-highest figure in the third quarter after it logged the highest third-quarter figure of 21.18 trillion won last year.
The sales estimate was slightly higher than the consensus of 20.46 trillion won by local analysts, provided by the FnGuide. Meanwhile, the data for net income was not available for Tuesday’s earnings guidance.
LG said its efforts to improve its business structure and implement a digital transformation have maximized the efficiency of the entire value chain, including purchasing, manufacturing, logistics and sales.
“The strong performance (in the third-quarter) was a result of the expansion of our business-to-business operations in areas such as automotive parts, as well as heating, ventilation and air conditioning solutions based on our deep understanding and experience of customers accumulated in the consumer business,” an LG Electronics official said.
“Our market strategies of introducing a business model that combines products, content and services, while strengthening the lineup in high-demand volume zones based on premium product competitiveness also contributed to the solid performance.”
The tech giant’s vehicle component solutions business is also expected to establish itself as a flagship business that will likely lead the company's overall growth, LG said.
The annual sales of its automotive parts business are predicted to exceed 10 trillion won for the first time this year backed by 100 trillion won in order backlogs and stable supply chain management, the company added.
LG also said the company’s television business continued to maintain a surplus and improved profitability despite the decline in demand.
Its content service business has also seen significant growth as it expanded from the previous product-centric approach to a media-and-entertainment platform. It also actively joined hands with various content providers and recently started upgrading the TV operating system for the first time in the industry.
Kim Ji-san, research head of Kiwoom Securities, predicted a rosy outlook for sales and orders of LG's auto parts.
"Although profitability may fluctuate depending on some one-shot factors, operating costs will be offset amid economies of scale expansion and its new Mexico plant's operation in the fourth quarter," Kim said.
LG’s earnings guidance was released at midday on Tuesday. The shares ended trading at 105,100 won on the same day, surging 7.03 percent from the previous session’s close.
LG will announce details of its quarterly earnings later this month.
