LGE sees record Q3 sales, but operating profit halved on GM EV recall

By Hong Yoo
  • Published : Oct 12, 2021 - 16:42
  • Updated : Oct 12, 2021 - 16:48

LGE sees record Q3 sales, but operating profit halved on GM EV recall (Yonhap)
LG Electronics is expected to report its highest-ever quarterly sales in the third quarter of this year, but a sharply lower operating profit due to provision expenses for a US recall.

The South Korean electronics firm on Tuesday announced its earnings guidance for the July-September period -- 18.7 trillion won ($15.5 billion) in estimated revenue and 540.7 billion won in estimated operating profits.

LG Electronics’ revenue exceeded a previous record set in the second quarter of this year, 17.8 trillion won. The estimated 18.7 trillion-won revenue is an increase of 22 percent from a year earlier.

The firm’s 540.7 billion won in operating profit, however, is a 49.6 percent drop from a year earlier. Compared to the previous quarter, when the firm logged 1.11 trillion won, the figure is more than 51 percent lower.

LG Electronics attributed the plunge to a total of 480 billion won that was set aside to cover the costs of the recall of General Motors’ Chevrolet Bolt electric vehicle in the US.

The company was the supplier of battery modules to the US automaker, while LG Energy Solution provided battery cells.

LG Electronics has already set aside 234 billion won in provision for the recall in the second quarter of this year.

The firm did not provide a breakdown of estimated earnings by business division.

Analysts forecast the reported sales to have largely come from strong sales of premium home appliances and TVs.

Market watchers expect home appliances alone to have made more than 6 trillion won in sales and operating profits of more than 500 billion won.

Looking into its business sectors, LG’s home appliance and air solution unit is expected to exceed the third-quarter sales of its renowned rival, Whirlpool of the US, and dominate the global appliances market with its premium products.

The TV business unit also contributed to sales increases centered around premium appliances such as OLED TVs.