[Click eStock] "LG Expected to Turn Around Earnings Starting Q2"

Yuanta Securities forecasted on the 24th that LG Group will start a performance turnaround from the second quarter.

LG posted somewhat lackluster results in the first quarter of this year. Sales and operating profit were 1.6 trillion KRW and 422.6 billion KRW, respectively, falling short of market expectations of 1.8 trillion KRW and 516 billion KRW. Compared to the first quarter of last year, sales and operating profit decreased by 1.5% and 16.3%, respectively.

Researcher Lee Seung-woong of Yuanta Securities analyzed, "The main reasons for LG's performance decline are the decrease in equity-method income due to the poor performance of its affiliate LG Chem and the temporary profitability drop of its consolidated subsidiary LG CNS." He added, "Due to the decrease in LG Chem's sales, trademark usage income linked to sales declined, and cash dividends also sharply decreased, worsening LG's separate financial results."

Researcher Lee Seung-woong predicted, "From the second quarter, LG Chem's performance will improve, and the profits of LG Electronics' affiliates will also increase significantly. LG CNS will recover profitability as external project costs return to normal levels." He also stated, "Stable performance related to smart factories for affiliates is being generated steadily, and new businesses such as smart cities and artificial intelligence (AI) continue to grow," adding, "This year, sales growth will be accompanied by maintaining a high operating profit margin in the 8% range."

Based on this outlook, Yuanta Securities presented LG's sales forecast for this year at 8.5 trillion KRW, a 13.5% increase from last year. Operating profit is projected to rise by a remarkable 33.8% to 608.3 billion KRW during the same period. He anticipated, "LG's available cash reaches 1.6 trillion KRW, so shareholder returns can also be expected," and "Dividend income is expected to increase more than anticipated due to improved performance of subsidiaries and affiliates."