LG tipped to deliver best Q3 earnings in 11 years: Report

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IANS | 01 Oct, 2020
LG Electronics is likely to report its largest third-quarter earnings in 11 years on the back of increased demand for its premium home appliance and TV products amid the pandemic-driven stay-at-home trend, analysts have said.

LG was expected to log $13.7 billion in sales in the July-September period, up 2.7 per cent from a year earlier, while its operating profit was estimated to increase 5.9 per cent on-year to 828 billion won over the period, according to Yonhap Infomax, the financial news arm of Yonhap News Agency.

If LG meets the consensus, it will be the company's best third-quarter performance since 2009, when it bagged 857.9 billion won in operating profit.

Compared with the previous quarter, LG was projected to see a 25.7 per cent increase in sales and a 67.1 per cent surge in operating profit in the third quarter.

"As more people spend more time at home, avoiding events like overseas trips and weddings, demand for upgrading their home appliances and TVs are rising," said Kwon Sung-ryul, an analyst at DB Financial Investment. "TV shipments have been increasing sharply after stores started to operate normally."

Analysts said rising online sales and efficient marketing cost management also have contributed to LG's strong third-quarter earnings.

"An expansion of online sales is positive for the company's profitability considering it reduces costs for inventory maintenance and marketing promotions," said Roh Keung-chang, an analyst at HMC Investment & Securities.

"We estimate the portion of online sales in TV and home appliance businesses at around 30 per cent and 20 per cent, respectively."

LG's products highlighting health and hygiene features, such as air purifiers and steam dryers, continued to post strong sales in the third quarter, according to analysts, while its TV business was buoyed by enhanced management of its product mix and rising sales of OLED TVs.

The global OLED TV market was tipped to expand to 904,000 units in the third quarter of the year, up 35.7 per cent from a year ago, according to market researcher Omdia. LG is the largest vendor of OLED TVs.

LG's vehicle solutions unit was also projected to narrow its operating losses in the third quarter as its automaking customers resume plant operations after lockdowns.