LG Electronics on Thursday estimated its second-quarter operating profit decreased 12 per cent year-over-year on weaker demand for TV and home appliances amid rising inflation and raw material costs.
Its earnings guidance for the April-June period showed the tech company’s operating profit declined 12 percent from a year ago to 791.7 billion won ($610.5 million).
The operating profit was 1.2 per cent lower than the average estimate, according to the survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Sales increased 15 per cent to 19.47 trillion won. The data for net income was not available.
Analysts have suggested less upbeat earnings for LG for the remaining year, as pandemic-driven pent-up demand for TV has lost steam and rate increases in major economies to control inflation weakened consumer-spending power.
Also high shipping costs amid supply chain disruptions are hurting the company’s bottom line.
The company said Thursday its TV business shrank in the quarter, with marketing costs rising and people spending less time at home as the COVID-19 pandemic is receding.
While overall consumer demand declined, the company said premium home appliances were still in high demand, especially in North America, and continued to deliver double-digit growth.
LG’s electric vehicle (EV) components business has greatly improved performance on growing demand from customers, which include Mercedes-Benz AG and General Motors, and increased profitability.
The company said the business swung to a net profit in the second quarter, with the quarterly sales topping 2 trillion won.
Earlier this week, LG said it secured $6.1 billion worth of new orders for electric vehicle (EV) parts and solutions in the first half.
The company expected its accumulated order backlog to top 65 trillion won by the end of the year, up 8 percent from a year ago.
The company will announce its Q2 earnings results on July 29.