LG Electronics Inc. is likely to report solid third-quarter earnings; analysts said as its mainstay home appliance business is expected to offset a slump in vehicle components and B2B units.
The South Korean tech giant was projected to log a record 18.3 trillion won ($15.4 billion) in sales in the July-September period, up 8.2 percent from a year earlier, on a consolidated basis. In comparison, its operating profit was estimated to jump 16.9 percent on-year to 1.1 trillion won over the period, according to the data from four local brokerage houses compiled by Yonhap Infomax, reports Yonhap news agency.
Compared with the second quarter, LG’s third-quarter sales and operating profit were expected to go up 7 percent and 27.6 percent, respectively.
LG recently withdrew from the smartphone business and will release its third-quarter earnings guidance next week.
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Analysts said the home appliance business once again anchored LG’s performance in the third quarter with strong sales of premium products.
They forecast LG’s home appliance and air solution unit to log an operating profit of around 600 billion won.
“With increases in disposable income in the North America region, it seems that the portion of premium home appliances is increasing,” said Cha Yu-mi, an analyst at MiraeAsset Securities.
LG’s home entertainment unit, which manages its TV business, was expected to report an operating profit of around 250 billion won.
Analysts predicted LG’s vehicle component solutions (VS) unit to stay in the red in the third quarter as global carmakers still deal with production issues from chip shortages.
Its VS business also faces a possible risk of reflecting additional provision costs for General Motors (GM) Co.’s Chevrolet Bolt electric vehicle (EV) recall.
The company has supplied GM with battery modules that are made with battery cells from LG Energy Solution Ltd. Last month, the tech firm set aside 234.6 billion won as a provision to cover the cost of the recall.