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Consolidated 3Q sales of 16,919.6 billion … Operating profit of 959 billion
Increased sales of premium products, recovery of global demand for auto parts
“Outlook for new business opportunities in the presence of volatility risk in the fourth quarter”
LG Electronics announced its third quarter results on the 30th, saying: “The stagnant demand in the first half of Corona 19 was postponed to the third quarter, and OLED TVs and appliances performed well in line with the Zipcock trend. He added: “For auto parts and smartphones, respectively, the normalization of automakers’ operations and the expansion of sales of mid- to low-priced products significantly reduced the deficit.”
In terms of performance by business division, the H&A (Home Appliance & Air Solution) division achieved sales of KRW 6,155.8 billion and an operating profit of KRW 671.5 billion.
As time spent at home increased, demand for home appliances increased and domestic and foreign sales and operating profit grew evenly. Sales posted the highest quarterly record and operating profit was the highest in the third quarter. Cumulative operating profit in the third quarter of this year exceeded 2 trillion won for the first time. According to LG Electronics, the annual operating profit of home appliances has never exceeded 2 trillion won.
The operating margin registered 10.9% due to higher sales and cost improvement in all regions of the world. This is the first time it has recorded double digits in the Q3 operating margin. Home appliance sales in the third quarter have been growing for the past 10 years.
New appliances represented by steam appliances, such as hair stylizers, dryers and dishwashers, which add convenience to life in line with the Zipcock trend, contributed significantly to Q3 results.
◇ Increase in sales of premium products, recovery trend in global demand for auto parts
The HE business division posted sales of KRW 3.6694 billion and an operating profit of KRW 326.6 billion. LG Electronics said: “Sales increased compared to the same period last year due to growing demand in advanced markets such as North America and Europe, and strong sales of premium products such as OLED TVs and nano-cell TVs.” Operating profit increased compared to the same period last year due to increased sales of premium products, although the increase in prices for LCD panels was a burden.
The MC division posted sales of KRW 1,524 billion and operating losses of KRW 144.8 billion. Sales increased on a quarterly basis as sales of mid-range to low-end smartphones in North America and Latin America increased. Operating loss decreased compared to the same period last year and compared to the previous quarter due to the continuous improvement of the business structure, such as the improvement of the global production efficiency, the expansion of ODM (production development of the manufacturer) and improving cost competitiveness.
The VS business division recorded sales of KRW 1.655 billion and operating loss of KRW 66.2 billion. As North American and European automakers normalize their operations, global demand for auto parts has rebounded. Sales increased from the same period last year and the previous quarter, respectively. Operating losses decreased dramatically on a quarterly basis thanks to increased sales and improved cost structure.
The BS business division generated sales of KRW 1,488.2 billion and an operating profit of KRW 77 billion. Due to the prolonged crown 19, the sales of the B2B business decreased slightly compared to the same period last year. Operating profit also decreased compared to the same period last year and compared to the previous quarter, as sales declined and price competition intensified.
◇ “Prospects for new business opportunities in the presence of volatility risk in the fourth quarter”
LG Electronics also revealed its outlook for the fourth quarter. LG Electronics said: “There is still the risk of economic volatility, as the rate of recovery of the real economy is weak and countries have tightened measures to restrict the movement due to concerns about the reproliferation of Corona 19.” He predicted that “to boost the economy, interest rates will be kept low and additional fiscal policies will continue.” As the away from home trend spreads, it is expected that new business opportunities will be created in line with changes in customer consumption patterns.
LG Electronics said: “We plan to focus on strengthening global brand awareness by turning crisis into opportunity,” adding: “We will continue to expand sales of health care appliances and OLED televisions by strengthening our online business.”
The global home appliance market is expected to intensify competition in the industry as demand is lower than in previous years due to the prolonged outbreak of COVID-19. The H&A division plans to maintain double-digit growth in sales during the same period last year after 3Q, starting with new appliances, and ensure profitability above the level of the same period last year by optimizing the inflow of resources.
The television market is also expected to intensify competition due to the peak season at the end of the year. The HE division is expected to increase sales of premium products such as OLED TVs, nano-cell TVs and large TVs, while expanding online sales and efficient resource management to achieve profitability higher than the same period last year.
The global 5G smartphone market is expected to grow in earnest. MC’s business division will expand sales by strengthening the 5G entry-level line, targeting major markets such as North America and Latin America, and will consistently promote the improvement of the business structure.
The finished vehicle market is gradually recovering and, in particular, high growth is expected in the field of connectivity and the spare parts business for electric vehicles. The VS Business Division plans to thoroughly manage the supply chain to maximize sales and ensure profitability through improved cost structure.
With the spread of non-face-to-face trends, demand for IT products such as laptops and monitors will continue to increase, but investment in information displays and solar modules is expected to decline and price competition to intensify. BS Business Division plans to actively respond to IT product sales opportunities, expand sales of strategic products such as premium digital signage, and strengthen the competitiveness of solar module products.
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