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(3rd LD) LG Electronics Q1 profit down on slow demand

Economy 15:44 April 07, 2023

(ATTN: ADDS share price at bottom)

SEOUL, April 7 (Yonhap) -- LG Electronics Inc. on Friday said its operating profit for the January-March period likely declined 23 percent from a year earlier amid the on-going macroeconomic woes that dampened consumer demand.

The South Korean tech company estimated its first-quarter operating profit at 1.49 trillion won (US$1.1 billion), down 22.9 percent from a year earlier.

Sales decreased 2.6 percent to 20.41 trillion won. The data for net income was not available.

The operating profit, however, was 20.7 percent higher than the average estimate, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

LG's quarterly profit has actually risen from a year ago, considering the 80 billion-won one-off gains from patent licenses that the tech firm made in the first quarter of last year.

Stabilizing material costs and steady sales of high-end home appliances helped the firm achieve the relatively solid earnings results.

LG said the company's efforts, such as reducing shipping costs and restructuring its business portfolio, to "preemptively" deal with slowing demand amid economic uncertainties helped it navigate various challenges.

LG's TV business likely made a turnaround in the first three months of the year, after making losses for the past three consecutive quarters, thanks to improving TV demand in the European market, LG's biggest OLED TV market, and decreasing inventory levels, as well as marketing costs.

According to market research firm Display Supply Chain Consultants (DSCC), premium TV shipments are estimated to have fallen 14 percent from a year ago in the first quarter, but they are expected to begin increasing in the second quarter.

Analyst Kim Dong-won from KB Securities expected LG's TV business to log 439 billion won in operating profit this year, up a whopping 81 times from a year ago.

LG did not offer a breakdown of each division's performance, but most of them, including its electric vehicle (EV) parts business, are believed to have made profits in the first quarter, according to analysts.

In the fourth quarter of last year, the EV parts business made a turnaround 10 years after it entered the market, and is considered one of LG's most promising future growth drivers.

While demand for consumer gadgets and home appliances is still sluggish, LG's business solutions division, which covers energy-efficient heat pumps, among other things, is believed to have expanded significantly.

The company will release its final earnings report later this month.

LG shares rose 0.35 percent to finish at 114,300 won on the Seoul bourse Friday, versus the wider market's 1.27 percent gain.

A flag with the logo of LG Electronics Inc. is seen in this undated file photo taken in Yeouido, Seoul. (Yonhap)

A flag with the logo of LG Electronics Inc. is seen in this undated file photo taken in Yeouido, Seoul. (Yonhap)


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