LG Electronics H&A unit drawing keen attention after record Q1 earnings

Keen market attention is now focused on the future performance of LG Electronics Inc.'s home appliance and air solution (H&A) unit following its record earnings in the first quarter of the year, analysts said Monday.

LG Electronics said Thursday the operating profit of its H&A division came to an all-time high of 919.9 billion won ($824 million) for the January-March period, up 22.1 percent from a year earlier. Sales of the electronics giant's flagship unit also soared 23.8 percent on-year to 6.7 trillion won.

It marks the first time that the unit's operating income has exceeded the 900 billion-won level.

In light of pent-up demand for home appliances, market watchers are keeping close tabs on when LG's H&A segment will be able to see its quarterly operating profit surpass the 1 trillion-won mark.

LG would be the world's first electronics manufacturer to have its H&A unit break the 1 trillion-won operating income barrier.

No global home appliance makers, such as Whirlpool, have recorded 1 trillion won or more in operating profit from their H&A units.

Market watchers said LG H&A unit's future performance will be driven by its steam-based products and LG Objet Collection, its new home appliance line offering enhanced customization options.

Cumulative sales of the Styler clothing care appliance surpassed 1 million units in April, 10 years after its market debut.

Shipments of must-have home appliances, such as dishwashers and LG Object Collection products, have also been on the rise recently.

In addition, expectations are high that the LG H&A division may see strong sales of air conditioners in the April-June period ahead of summer, according to analysts.

"In light of brisk demand for new home appliance products, there is a high possibility that LG may become the world's first electronics maker to breach the mark of 1 trillion won in H&A operating profit," an industry source said.

But some pessimists say LG will find it difficult to register 1 trillion won in H&A operating profit anytime soon in light of several factors.

An increase in the COVID-19 vaccination rate in the United States and Europe could prompt people to make more trips, resulting in decreased demand for home appliances.

Other hurdles include a recent global shortage of semiconductors, more logistics costs and the fact that LG have usually posted better records in the first quarter than the second quarter and in the first half than the second half, they added. (Yonhap)