Seoul: LG Electronics Inc. announced a 3.1 percent decline in second-quarter net profit due to increasing logistics and tariff costs, despite surpassing market expectations.
According to Yonhap News Agency, LG Electronics reported a net profit of 609.7 billion won (US$442.5 million) for the April-June period, marking a decrease from the previous year. The company's operating profit plummeted by 46.6 percent year-on-year to 639.4 billion won, while revenue saw a 4.4 percent decline to 20.73 trillion won.
Despite these declines, the earnings exceeded market forecasts, with analysts originally estimating a net profit of 173.2 billion won, as per a survey by Yonhap Infomax. The better-than-expected net profit was attributed to equity gains from affiliates.
However, LG Electronics highlighted that challenges such as decreased demand in major markets, U.S. tariff uncertainties, and heightened competition adversely impacted its operating profit and sales. Rising logistics expenses further compounded the company's profitability issues compared to the previous year.
Within its divisions, LG's home appliance and business-to-business (B2B) segments, which include vehicle components and heating, ventilation, and air conditioning (HVAC), performed robustly during the second quarter. The home appliance sector achieved sales of 6.6 trillion won and an operating profit of 439.9 billion won. The vehicle component division, a key growth area for LG, reported record sales of 2.85 trillion won and an operating profit of 126.2 billion won. Meanwhile, the HVAC division posted sales of 2.64 trillion won and an operating profit of 250.5 billion won.
The company noted the resilience of its B2B segments to market fluctuations, with combined sales from the vehicle component and HVAC units increasing by 3 percent year-on-year to 6.2 trillion won in the second quarter.
Looking ahead, LG Electronics anticipates a slow recovery in the global home appliance market amid intensified competition. The company plans to sustain profitability by expanding subscription-based services for consistent revenue. In the B2B sector, LG aims to uphold strong partnerships with key clients and adapt to seasonal demand flexibly.