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LG Electronics profit drops 81% as costs surge, EV parts demand slows.
Source: LG Electronics

LG Electronics profit drops 81% as costs surge, EV parts demand slows.

Philip Lee profile image
by Philip Lee

Seoul, South Korea - LG Electronics (066570.KS) reported an 81.4% drop in third-quarter net profit on Thursday, as rising logistics costs and sluggish demand for electric vehicle components weighed on margins despite robust appliance sales.

The world's second-largest TV maker posted a net profit of KRW 90.2 billion (US$65.3 million) for the July-September quarter, down from KRW 485.2 billion (US$351.4 million) a year earlier. Operating profit fell 20.9% to KRW 751.9 billion (US$544.5 million).

However, revenue rose 10.7% to KRW 22.18 trillion (US$16.06 billion), driven by strong sales of home appliances and televisions.

The company's mainstay home appliance division saw sales climb 11.7% to KRW 8.34 trillion (US$6.04 billion), though the operating margin contracted to 6.3% from 6.7% a year earlier due to rising logistics costs.

TV unit sales grew 5.2% to KRW 3.75 trillion (US$2.72 billion), boosted by increased OLED TV shipments, particularly in Europe. 

The division's operating margin declined to 1.3% from 3.2% amid pressure from rising LCD panel prices.

The vehicle components division, which analysts view as a future growth driver, reported flat operating profits despite a 4.3% revenue increase to KRW 2.61 trillion (US$1.89 billion). 

The company cited stagnant electric vehicle demand and higher R&D costs for new projects.

LG Electronics announced plans to achieve KRW 100 trillion (US$72.4 billion) in revenue by 2030 through its "Value-up Program," which targets a 7% compound annual growth rate. The company also aims to increase its return on equity to 10% by 2027.

For the fourth quarter, LG warned of continued pressure from gradual interest rate adjustments and potential impacts from Middle East geopolitical tensions. However, it noted that global shipping rates are stabilizing.

The company increased its dividend payout ratio to 25% for 2024-2026 and implemented a semi-annual dividend scheme with a minimum payment of KRW 1,000 (US$0.72) per common share annually.

(US$1 = KRW1,380.82)

Philip Lee profile image
by Philip Lee

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