LG Electronics projects 2020 to be best-ever year

LG Electronics Co. is set to herald best-ever annual results in 2020 as it came out as a winner from pent-up demand for high-end TVs and home appliances during the pandemic-ridden year on top of an improvement in demand for mobile devices and automotive electronics.

In its earnings guidance for the fourth quarter and annual income released Friday, the South Korean consumer electronics giant estimated an operating profit of 647.0 billion won ($593.1 million) for the fourth quarter ended in December 2020. The estimate is more than six times the figure reported a year earlier, while it is down 32.5 percent against the previous quarter.

Revenue came to 18.8 trillion won, up 16.9 percent on year and 11.0 percent on quarter.

The results beat analysts’ consensus estimates of 619.8 billion won in operating income and 17.86 trillion won in revenue, as compiled by local financial market tracker FnGuide.

For full 2020, LG Electronics reported 3.2 trillion won in operating income, up 31 percent on year. It is the first time for its annual operating income to top 3 trillion won. Revenue expanded 1.5 percent on year to 63.3 trillion won, which is also an all-time high.

On Friday, its shares finished 1.67 percent lower at 147,500 won on profit-taking.

The company will announce its detailed earnings results later this month, but market analysts attributed the company’s better-than-expected earnings to its efforts to improve profit margins.

The company reformed the cost structure of smartphone business through factory relocation while expanding premium line sales of home electronics such as OLED TVs. Also, its fledgling car component solution business has shown signs to churn out profits soon while demand for IT products stayed strong amid online service’s continuous growth from Covid-19 social restrictions.

The vehicle component solution (VS) division, which registered an operating loss of 66.2 trillion won in the third quarter 2020, is expected to make its first profit in the third quarter this year while some anticipate the turnaround point would come even sooner. LG Electronics has joined hands with world’s No. 3 auto parts maker Magna International as they agreed in late December to set up a joint venture for EV parts market.

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