LG Electronics reports steep fall in Q3 net profit

LG Electronics' third-quarter net profit slumped 81.4% from a year earlier, a drop attributed to rising logistics costs.

The South Korean company’s net income for the July-September period was 90.2 billion won (USD 65.35 million), compared with a net profit of 4.85 trillion won from the corresponding period last year. 

The main reason for the decline in operating profit is increased logistics costs, the company indicated. 

“As a result of the bidding for maritime freight rates in the second half, the average maritime freight rate per container is expected to increase by about 58% year-on-year, and marketing competition costs such as advertising expenses are expected to rise,” LG Electronics said.

The company’s operating profit dropped 20.9% on-year to 751.9 billion won from 950.1 billion won, while sales were up 10.7% to 22.17 trillion won. 

Operating profit was 22.4% lower than the average estimate, as per a survey by Yonhap Infomax, the Korea Times reported. 

LG said its focus on business-to-business operations helped its quarterly sales rise for four straight quarters.

Its conventional home appliances business posted 8.3 trillion won in sales, up 11.7% from last year, and 527.2 billion won in operating profit, an increase of 5.5%

The TV division reported 3.7 trillion won in sales and 49.4 billion won in operating profit for the third quarter.

The vehicle component solutions business saw its sales reach 2.6 trillion won, while operating profit was 1.1 billion won.

The business solution division’s sales increased to 1.4 trillion won, showing an operating loss of 76.9 trillion won.

“We aim to achieve year-on-year revenue growth by expanding our home appliance business and actively responding to the increasing demand for TVs and vehicle components, including the infotainment sector,” LG Electronics said.