By LG Electronics just dropped its third-quarter results, and it’s a mixed bag. The company hit record-high sales, raking in 22.1769 trillion won ($17.06 billion), up 10.7% from last year. But here’s the kicker: operating profit took a nosedive, plummeting 20.9% to 751.1 billion won. Investors aren’t thrilled, and the numbers fell short of what analysts were expecting. So, what’s going on?
Sales Soar, But Costs Soar Even Higher
Despite smashing sales records, LG couldn’t outrun the shadow of skyrocketing expenses.
- Sales: 22.1769 trillion won, a 10.7% jump year-over-year.
- Operating Profit: 751.1 billion won, down 20.9% from the previous year.
- Analysts’ Forecast: Expected operating profit was around 968.6 billion won.
- Stock Reaction: Shares dipped 1.2% after the news broke.
The surge in shipping costs and beefed-up marketing budgets ate into profits big time. The company just couldn’t push past that 1 trillion won profit mark.
Shipping and Marketing Expenses Hit Hard
LG pointed fingers at higher logistics costs and ramped-up marketing spend.
| Expense Factor | Impact on Profit |
|---|---|
| Shipping Costs | Jumped by about 58% year-on-year |
| Marketing Expenses | Swelled due to fiercer competition |
| Raw Material Costs | Continued to squeeze profitability |
They’d warned us earlier this year: shipping costs were on the rise, and marketing wasn’t getting any cheaper. Well, they weren’t kidding. These expenses gnawed away at the bottom line, despite the stellar sales.
Home Appliances Keep the Momentum Going
The home appliance division is holding its own, even with the rough seas.
Changes like subscription services and direct-to-consumer sales are fueling growth. They’re expanding products and prices across different regions and doubling down on online sales. Sure, shipping costs and slow demand recovery put a dent in profits, but they’re not letting that slow them down.
They’re mixing things up in a market that’s as competitive as ever, and it’s paying off in steady sales growth.
Vehicle Solutions and TVs: A Tale of Two Divisions
The Vehicle Solutions division showed some spark, while the TV business faced headwinds.
The car tech side posted an operating profit between 86 billion won and 118 billion won. Not too shabby, considering the slowdown in electric vehicle demand. They’re still sitting on orders worth about 100 trillion won.
On the flip side, the TV division pulled in around 100 billion won in operating profit. Demand for OLED TVs is crawling back in places like North America and Europe, but high raw material costs are raining on the parade.
LG is betting on premium products and new tech to turn things around. They’re not just sitting back—they’re gearing up to tackle these challenges head-on.