Planning to Expand Online Marketing
LG Electronics announced on April 29 that its Q1 sales and operating profit are 14,728.7 billion won and 1,090.4 billion won, respectively. Although sales showed a year-on-year decline of 1.3 percent, operating profit jumped 21.1 percent from a year ago. The operating profit ratio rose to 7.4 percent, the highest Q1 figure ever recorded.
The consumer electronics business unit of the company contributed to the outcome with social distancing leading to an increase in product demand. In addition, the spread of COVID-19 hindered its large-scale marketing events, which led to a substantial decrease in marketing cost. Although the business unit’s quarterly sales edged down to 5,418 billion won, its operating profit (753.5 billion won) and operating profit ratio (13.9 percent) reached new quarterly highs.
On the other hand, the smartphone and automotive electronics business units of LG Electronics took a direct hit from the coronavirus. The former’s sales (998.6 billion won) dropped 33.9 percent from a year earlier and its operating loss (237.8 billion won) continued for the 20th consecutive quarter due to manufacturing shutdown in China and logistics shutdown in Europe and Latin America.
LG Electronics’ Q2 sales and operating profit are likely to fall given that the impact of the coronavirus began to take full shape in March. The company is planning to respond to the possibility by online marketing expansion.