[Asia Economy Reporter Dongwoo Lee] LG Electronics is expected to avoid the worst performance caused by the COVID-19 pandemic this year in the second quarter, thanks to strong results in healthcare and premium home appliances.
According to securities information provider FnGuide on the 21st, LG Electronics' operating profit forecast for the second quarter of this year was estimated at 401.2 billion KRW. Although this represents a 38.4% decrease compared to the same period last year (652.2 billion KRW), it is considered a relatively strong performance given the impact of COVID-19.
In fact, the total operating profit forecast for the first half of this year, combining the first and second quarters, is 1.4916 trillion KRW, narrowing the gap to around 3% compared to last year (1.5528 trillion KRW).
The better-than-expected results for the early second quarter were attributed to the recovery of consumer sentiment since May. The expansion of domestic consumer sentiment particularly drove LG Electronics' home appliance sales, which have a relatively high domestic market share, supporting overall operating profit.
According to Emart, major white goods sales growth rates in the second quarter (April 1 to June 16) increased compared to the same period last year in categories such as refrigerators (45.3%), washing machines (42.2%), TVs (37.1%), and dryers (3.7%). During the same period, SSG.com also saw major white goods sales growth rates rise by an average of 50%, including refrigerators (66.7%), washing machines (58.1%), TVs (49.2%), and air conditioners (45.4%).
Additionally, the sales proportion of LG Electronics' representative steam appliances such as stylers, dryers, and dishwashers, especially large-capacity products, has rapidly increased up to 90%, driving performance.
The large-capacity 'LG Tromm Styler' accounted for 55% of LG Electronics' domestic clothes dryer sales in January, rising to 70% of total sales this month. The large-capacity 16kg dryer with steam function also accounted for 80% of the company's domestic dryer sales this month, boosting revenue.
North American home appliance retailer Best Buy is also planning to reopen more than 80% of its stores and expects sales growth of over 15% year-on-year for its flagship premium line, OLED TVs.
An industry insider said, "LG Electronics is expected to perform considerably well in operating profit for the first half of the year," adding, "Especially with the launch of new home appliances in the fourth quarter, which generally have a small sales proportion in the home appliance industry, expectations are high that it will offset the COVID-19 crisis."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
