LG Electronics Inc. delivered an earnings surprise in the third quarter. The company announced on Oct. 7 that it posted record high sales in the July-September period contrary to market expectations.
The company's temporary estimates of third-quarter sales and operating profit reached 15.70 trillion won (US$13.10 billion) and 781.10 billion won (US$652 million), respectively. It is the company's highest-ever sales for the third quarter and also the second highest operating profit for the period after 2009.
LG Electronics has shown a downward trend in operating profit in the second half since 2016. This is largely due to marketing costs and seasonal factors. However, its third-quarter operating profit increased 4.3 percent from a year earlier and as much as 19.7 percent from the previous quarter.
The company said the home appliance division, which led the profit growth, surpassed 5 trillion won (US$4.17 billion) in sales in the third quarter, the first time that quarterly sales topped the 5 trillion won mark.
The television business will see improvement in profitability with higher sales than the previous quarter. LG Electronics has recorded some 200 billion won (US$166.94 million) in operating profit as the premium television market at home and abroad is growing despite the intensifying competition between the company’s OLED television and Samsung Electronics’ QLED television. Favorable exchange rates also boosted profits.
LG Electronics’ smartphone division, which has recorded a loss for 18 quarters in a row, is expected to reduce its losses from some 300 billion won (US$250.42 million) to 150 billion won to 170 billion won (US$125.21 million to US$141.90 million) with its plant relocating to Vietnam.
Market watchers say if the trend continues, LG Electronics may be able to achieve the milestone of 3 trillion won (US$2.51 billion) in annual operating profit for the first time in its history. LG Electronics’ cumulative operating profit in the first three quarters is estimated at 2.33 trillion won (US$1.95 billion).