LG Electronics posts record sales in Q2 despite global slowdown

[Photo by Han Joo-hyung]

Despite the worldwide economic downturn, LG Electronics Inc. achieved its highest-ever quarterly sales in the second quarter of this year, driven by the expansion of profitable B2B transactions and vehicle components business.

LG Electronics said in a regulatory filing on Thursday that its sales came to 19.99 trillion won ($15.6 billion) for the April-June period with an operating profit of 741.9 billion won. This marks the highest second quarter sales in the company’s history.

Sales were up 2.7 percent from a year ago, but operating profit was down 6.2 percent.

The operating profit fell by almost 150 billion won from its preliminary announcement mainly due to the setting aside of 151 billion won as provision.

The increase in vehicle component material costs during the process of conducting the recall of GM’s Chevrolet Bolt EV contributed to this provision.

By business sector, the Home Appliance & Air Solution (H&A) division, responsible for household appliances, recorded an operating profit of 600.1 billion won, up 40 percent from a year earlier.

Despite decreased market demand, the rapid growth of the B2B air conditioning business contributed significantly. The Home Entertainment (HE) division for TVs achieved 3.15 trillion won in sales and 123.6 billion won in operating profit. The division’s operating profit increased thanks to the growth of high-profit content and service businesses despite a drop in TV sales.

The Vehicle Component Solutions (VS) division, responsible for car electronics, recorded sales of 2.66 trillion won and an operating loss of 61.2 billion won due to the impact of GM’s recall-related cost of 151 billion won.

The division’s order backlog is expected to reach 100 trillion won by the end of the year, indicating continued rapid growth.

LG Electronics said it plans to produce car motor products at its Mexican factory for North American market coverage starting in September, and it will also invest in expanding production in Vietnam and Poland.

The Business Solutions (BS) division, on the other hand, was a bit sluggish. Revenue for the second quarter was 1.33 trillion and operating profit 2.6 billion won. Both figures were lower compared to the same period a year ago due to the prolonged lack of demand for IT products.