Sales of KRW 12.8338 trillion, operating profit of KRW 495.4 billion
A decrease of 17.9% and 24.1% respectively compared to the same period last year
Home appliances achieve highest operating profit margin in Q2


LG Electronics announced on the 30th that it achieved consolidated sales of 12.8338 trillion won and operating profit of 495.4 billion won in the second quarter.

Sales and operating profit decreased by 17.9% and 24.1%, respectively, compared to the same period last year. In the first half of this year, sales decreased by 9.8% year-on-year, but operating profit increased by 2.1%. Operating profit for the first half of the year exceeded 1.5 trillion won for the fourth consecutive year.

◇ Sales and operating profit by sector and third quarter strategy

The H&A business division, which is in charge of home appliances, achieved sales of KRW 5.1551 trillion and operating profit of KRW 628 billion.

Despite year-on-year declines in domestic and international sales and operating profit due to the impact of COVID-19, the company's focus on premium products and continued cost-effectiveness, including cost reductions, resulted in record-high operating profit margins of 12.2% and 13.1% in the second quarter and first half of the year, respectively. Operating profit margins for the first half of the year have been in the double digits for four consecutive years since 2017. Compared to Whirlpool in the US, both sales and operating profit margins were more than three times higher.

The HE division, which is responsible for TVs, monitors, etc., recorded sales of KRW 2.2567 trillion and operating profit of KRW 112.8 billion.

Sales declined year-over-year due to the closure of global retail stores and the postponement of global sporting events. However, operating profit and operating profit margin for the first half of the year exceeded the same period last year, driven by efficient marketing spending and an improved cost structure. The TV market is expected to see a recovery in global demand in the third quarter. LG Electronics plans to focus on premium products such as OLED TVs and NanoCell TVs, while securing sales opportunities through expanded online sales and efficient resource management to restore profitability.

The MC business division, which is in charge of smartphones, recorded sales of 1.3087 trillion won and an operating loss of 206.5 billion won.

Revenue increased 31.1% quarter-over-quarter, driven by increased smartphone sales in key regions such as North America and Korea. Continued structural improvements, including enhanced cost competitiveness, reduced losses compared to the same period last year and the previous quarter. LG Electronics announced that it will accelerate sales growth and improve profitability by increasing the overseas launch of its strategic smartphone, the LG Velvet, and expanding sales of new budget models.

The VS division, which is in charge of battlefield equipment, recorded sales of 912.2 billion won and an operating loss of 202.5 billion won.

Operating losses continued due to a year-on-year decline in sales and a continued decline in operating income due to factory shutdowns at automakers in North America and Europe and delays in mass production of new projects. In the third quarter, major automakers are expected to restart their factories, and demand for auto parts is expected to gradually recover. LG Electronics plans to pursue gradual performance improvement.

The BS division, which is responsible for commercial displays, solar modules, and energy storage devices, recorded sales of KRW 1.3071 trillion and operating profit of KRW 98.3 billion.

With the spread of remote work and online education, sales of IT products such as laptops and monitors increased. However, travel restrictions around the world due to COVID-19 hindered sales of information displays and solar modules. Consequently, sales and operating profit decreased year-over-year. With demand for IT products increasing in line with the contactless trend, LG Electronics announced plans to actively respond to this trend and focus on increasing sales of premium digital signage and strengthening the product competitiveness of solar modules to drive sales growth.

Global economic uncertainty is expected to persist in the third quarter, driven by concerns about a potential resurgence of COVID-19 and a renewed US-China trade dispute. Despite this, LG Electronics stated, "We expect to achieve similar performance in the third quarter to the same period last year."