Seoul: LG Electronics Inc. announced on Friday a decline in its second-quarter net profit due to rising logistics and tariff costs, despite surpassing market expectations. In a regulatory filing, it was revealed that the company achieved a net profit of 609.7 billion won (US$442.5 million) for the April-June period, marking a 3.1 percent decrease from the previous year.
According to Yonhap News Agency, LG Electronics' operating profit experienced a significant drop of 46.6 percent year-on-year to 639.4 billion won, while revenue decreased by 4.4 percent to 20.73 trillion won. Despite these declines, the earnings exceeded market forecasts, with analysts predicting an average net profit of 173.2 billion won, as per a survey conducted by Yonhap Infomax, the financial data arm of Yonhap News Agency.
LG Electronics attributed the better-than-expected net profit to equity gains from its affiliates. However, the company highlighted that waning demand in major markets and external challenges, including U.S. tariff uncertainties and intensifying competition, adversely impacted its operating profit and sales. Rising costs, particularly logistics expenses, also affected overall profitability compared to the same period last year.
Among its divisions, the home appliance and business-to-business (B2B) segments, which include vehicle components and heating, ventilation, and air conditioning (HVAC), performed robustly in the second quarter. The traditional home appliance sector reported sales of 6.6 trillion won and an operating profit of 439.9 billion won. Meanwhile, the vehicle component division, a key growth driver for LG Electronics, achieved record sales of 2.85 trillion won and an operating profit of 126.2 billion won. The HVAC division recorded sales of 2.64 trillion won and an operating profit of 250.5 billion won.
LG Electronics emphasized the resilience of its B2B segments to market volatility. Combined sales from the vehicle component and HVAC units rose by 3 percent year-on-year to 6.2 trillion won in the second quarter. Looking forward, the company anticipates a slow recovery in the global home appliance market amid intensified competition and plans to protect profitability by expanding its subscription-based services for stable revenue. In the B2B sector, it aims to maintain strong partnerships with key clients and respond flexibly to seasonal demand.
Shares of LG Electronics fell 1.03 percent to close at 77,100 on the main bourse, significantly underperforming the broader Korea Composite Stock Price Index (KOSPI), which closed 0.18 percent higher.