LG Electronics Projects Profit Drop, Missing Consensus — 2nd Update
By Kwanwoo Jun
LG Electronics forecast a decline in third-quarter operating profit partly due to increased logistics and marketing expenses, disappointing market expectations for profit growth.
The South Korean consumer electronics giant said Tuesday that it continues to face challenges from rising raw-material prices and shipping costs amid higher maritime freight rates for the second half of 2024, along with a delayed recovery in demand.
The downbeat earnings guidance comes as the company is trying to diversify its business model amid a slower-than-expected recovery in demand for televisions, consumer electronics and home appliances.
LG Electronics expects its operating profit for the quarter ended September to come in at 751.10 billion won, equivalent to $558.1 million, down 21% from a year earlier.
That figure missed a FactSet-compiled consensus estimate of 1.024 trillion won.
Revenue is projected to have risen 11% to 22.177 trillion won, LG Electronics said, slightly below the FactSet consensus forecast.
LG Electronics didn't provide additional details in its preliminary earnings report and is scheduled to release its full quarterly results later this month.
The company is working to expand its corporate client base while exploring new business-to-consumer models, including subscription services in the home appliance market. Additionally, it aims to continue growing its vehicle-component business, driven by steady demand for in-vehicle infotainment products and safety-driving features.
Shares in LG Electronics fell 5.5% following the below-consensus preliminary earnings, bringing the stock's year-to-date losses to more than 3%.
LG Corp., the holding company of the LG Group conglomerate, recently said that it has set aside 200 billion won to raise its stake in LG Electronics over the next few months, a move some analysts believe could help boost the stock.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
October 08, 2024 02:27 ET (06:27 GMT)
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