LG Electronics expects best-ever quarterly earnings in Q1

Seoul (South Korea), April 7: LG Electronics Inc. on Wednesday expected its best-ever quarterly performance in the first quarter as its home appliance and TV sales apparently basked in pent-up demand amid the pandemic.
In its earnings guidance, the South Korean tech firm projected its operating profit at 1.51 trillion won (US$1.3 billion) for the first three months of 2021, up 39.2 percent from a year earlier.
Its first-quarter operating income estimate beat the market consensus of 1.27 trillion won in the survey on seven brokerage houses by Yonhap Infomax, the financial arm of Yonhap News Agency.
LG also expected its first-quarter sales at 18.8 trillion won for the January-March period, up 27.7 percent from a year earlier. The figure is also above the market consensus of 17.9 trillion won.
Should its forecast stand, both sales and operating profit will be the largest for any quarter in its history, beating revenue of 18.78 trillion won in the fourth quarter of 2020 and operating income of 1.24 trillion won in the second quarter of 2009.
LG did not break down performances of its respective business divisions, saying it will announce the detailed earnings later this month.
LG's Home Appliance and Air Solution (H&A) unit once again anchored the company's robust first-quarter performance with solid demand for its premium products, according to analysts.
"The H&A unit is expected to report expanded sales with its popular products like dishwashers, dryers and vacuum cleaners," said Park Kang-ho, an analyst at Daishin Securities. "We expect the unit to log an operating margin of 13.9 percent on the back of average selling price (ASP) increases."
LG's Home Entertainment (HE) unit that manages the TV business also performed well, according to analysts. LG is the world's second-largest TV vendor and the top supplier of OLED TVs.
"Despite an increase in panel prices, its profitability is expected to deliver market-estimate beating results with increased sales of premium TVs like OLED TVs and large-size UHD products," said Roh Kyoung-tak, an analyst at Eugene Investment & Securities.
Market watchers predict that LG's vehicle component solutions (VS) division stayed in the red for the first quarter, although the unit must have narrowed its operating loss on the back of increased sales of electric vehicle parts.
"Its auto parts business is still in the stage where the company is feeling the pressure of costs," said Ko Jung-woo, an analyst at NH Investment & Securities. "However, it is expected to contribute to the company's bottom line from the second half of the year."
LG's mobile business was projected to suffer extended losses for the first quarter, with many expecting operating losses at around 280 billion won.
On Monday, LG said its mobile communications (MC) unit will no longer operate after July 31, citing fierce competition in the industry and its long slump. LG's mobile business has been in the red since the second quarter of 2015.
"Its losses from discontinued operations will be reflected from the second quarter of this year," said Lee Jong-wook, an analyst at Samsung Securities. "It is expected to report massive one-off costs considering expenses related to asset rearrangement, contract termination with chips suppliers and mobile carriers and after-sales programs."
Source: Yonhap