LG sees Q2 profit drop 24% from COVID-19

LG Electronics has posted 495.4 billion won in operating profits ans 12.8338 trillion won in sales in the second quarter of 2020, the company said on Thursday.

It is decline of 24.1% and 17.9%, respectively, year over year.

LG said earnings declined across the board from the impact of the COVID-19 pandemic from store closures and factory halts of automobile companies.

But the company managed cost and focused on home appliances to defend profitability in the quarter.

Its home appliance business marked 628 billion won in operating profits for the quarter, a decline of 12.5% year over year. Sales stood at 5.2 trillion won, a drop of 16% from a year ago.

The business improved and save cost during the quarter to reach a margin rate of 12.2%, LG stressed. Uncertainties remained high for the third quarter but the company expected some recovery.

The home entertainment business, which produces TVs, saw operating profits decline 26% from a year ago to 112.8 billion won. Its sales stood at 2.26 trillion won.

However, LG said it maintained a margin rate of 5% from cost cutting effort. The South Korean electronics maker expected TV demand recover to start recovering in the third quarter starting with the developed countries.

It will expand online sales and push its OLED TV, Nanocell TV and other ultra large, premium TV models to recover the business’s profitability.

The mobile communication business, which produces smartphones, saw a 19% decline year over year in sales. 

Operating loss stood at 206.5 billion won for the quarter but LG said it was an improvement over the previous quarter and the same time period a year ago.

The company expects smartphone demand to have hit bottom in the second quarter and will start recovering in the third quarter. It will expand the sales of LG Velvet globally and launch new budget model smartphones to improve profitability, LG said.

The vehicle component business saw sales decline from automobile companies halting their factory operations due to the COVID-19 pandemic. Demand is expected to recover in the third quarter, LG said.

Its business solution business saw sales drop 13% year over year from the impact of the virus outbreak.