LG Electronics H1 profit 7-yr high on robust sales of home appliances

South Korea¡¯s second largest electronics maker LG Electronics recorded the highest first-half operating profit in seven years fueled by its traditional strength in home appliances and TVs.

The household consumer appliance name in a regulatory filing Thursday reported that its consolidated operating profit for the second quarter surged 139.5 percent from the same period of last year to reach 584.6 billion won ($520 million). Sales increased 0.6 percent on year to 14 trillion won. For the first six months of the year, the company registered 1.09 trillion won in operating income, breaking the 1 trillion won mark for the first time in two years.

But the company¡¯s third-quarter outlook is less optimistic due to signs of softening in TV and home appliance demand and fiercer competition in the smartphone market.

Premium category of the H&A (Home Appliance & Air Solution) division and HE (TV, audio, and video) division led growth in the first half and made up for the deficit-ridden smartphone division.

The company raked in 433.7 billion won in operating income from H&A division in charge of home appliances and 356.7 billion won from HE division responsible for making and selling its lucrative big-screen TVs. Fueled by sales boost of premium products, H&A division recorded 9.2 percent in operating profit margin in the second quarter for the second consecutive quarters following the first quarter with 9.7 percent. Thanks to robust sales of organic light-emitting diode (OLED) TVs and improving cost competitiveness, HE division hit all-time quarterly operating profit and a record operating profit margin of 8.6 percent.

Mobile Communications (MC) division in charge of mobile phones extended losses in the second quarter, recording 153.5 billion won in operating loss due to early supply setback in its new smartphone G5. Vehicle components (VC) division posted a small loss of 16.8 billion won but it saw its sales rise every quarter since the establishment of the division in June 2013. The company hopes the automotive electronics division would drive growth by riding on the proliferation of electric vehicles.

As of 1:10 p.m. Friday, the company shares decreased 2.91 percent to 53,400 won from the previous session.

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