Since its founding in the first quarter of this year, LG Electronics has achieved record-high quarterly results.
Excluding the MC division, which decided to withdraw from the smartphone business, the performance of all business divisions increased significantly compared to the first quarter of last year. In particular, household appliances and TVs led the record-breaking performance.
LG Electronics announced on the 7th that it achieved consolidated sales of 18 trillion 85.7 billion won and operating profit of 1.5178 billion won through an announcement of its provisional results for the first quarter of this year. This is a record-high quarterly record, up 27.7% and 39.2% respectively compared to the same period last year.
Although the performance of each division was not disclosed on the day, the stock market expects that the H&A division, which is in charge of household appliances, has surpassed KRW 6 trillion in sales and KRW 800 billion in operating profit. This is thanks to the continued popularity of new home appliances and the success of the space interior home appliance’LG Object Collection’.
The sales of the HE division, which is in charge of TV, increased by about 30% compared to the first quarter of 2020, driving the growth trend. OLED TVs are expected to be around 800,000 units, and LCD TVs are expected to increase significantly from the first quarter of last year to 7.8 million units.
The sales of the MC division are expected to be similar to those in the first quarter of last year. It was in the red for 24 consecutive quarters from the second quarter of 2015. Smartphone shipments are expected to be on the same scale as in the first quarter of last year, and ASP (average product selling price) is expected to decline significantly.
The VS division’s sales, which are the electronic parts division, are expected to increase by nearly 40% year-on-year. It is estimated that sales increased and the deficit decreased YoY due to the recovery of demand from automakers.
Following 1Q, 2Q11 earnings are expected to continue to rise. Accordingly, it is expected that this year’s performance will be better than last year (sales 63,2638 billion won, operating profit 3,1918 billion won), the record high.
Ji-san Kim, a researcher at Kiwoom Securities, said, “The strong demand for home economy centered on home appliances and TV will continue, and automobile parts will show improvement in constitution, mainly for electric vehicle parts.” It can be overcome through improvement and ASP rise, and this is the fundamental difference between mobile phones and mobile phones.”
The MC division’s operating profit is expected to be reflected in profits and losses from discontinued operations from 2Q, but the impact this year is not expected to be significant. On the 5th, LG Electronics held the board of directors and decided to end the mobile phone business on July 31st.
IBK Investment & Securities Researcher Kim Unho said, “As the MC division is converted to a discontinued business, the expected profit is not that the MC division’s operating deficit will be zero, but it is estimated that it will be about marketing expenses and R&D expenses.” In addition, the amount of restructuring-related expenses on net profit is expected to be larger than the operating loss.”
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In 2Q, the VS division’s deficit is also expected to decrease. In particular, LG Electronics expects the VS business division’s earnings to turn to the black after 2H.
Stock prices have a similar outlook. Daishin Securities predicted that the VS business division’s sales would increase to 7.6 trillion won this year and 10.7 trillion won in 2023. Meritz Securities is also expected to reach 7.5 trillion won this year and 9.3 trillion won by 2022.