Sluggish TV sales cut LG Electronics profit in half

LG Electronics’ headquarters in Yeongdeungpo District, western Seoul, is pictured on April 7. [ YONHAP]

 
LG Electronics reported weaker-than-expected second-quarter results on Friday as nearly 200 billion won ($145 million) in operating losses in its TV division dragged down overall performance. The company cited sluggish global demand, intensifying price competition with Chinese rivals and U.S. tariffs as key factors behind the downturn.
 
Revenue at the tech giant fell 4.4 percent from the previous year to 20.73 trillion won in the April-June period, and operating profit dropped 46.6 percent to 639.4 billion won. The results missed the average analyst estimate for revenue of 21.5 trillion won and operating income of 856.3 billion won.
 
 
The steepest decline came from the Media and Entertainment Solution (MS) Division, which oversees the TV business. The unit’s revenue fell 13.5 percent from 2024 to 4.39 trillion won and posted operating loss of 191.7 billion won — a reversal from last year’s profit.
 
“TV sales declined due to weaker market demand, and profitability was hurt by price cuts and higher marketing expenses aimed at addressing intensifying competition,” LG Electronics said.
 
 
The MS Division has struggled to regain momentum despite a restructuring in 2024 that makes year-over-year comparisons difficult. Last year, operating profit dropped from 181 billion won in the first quarter to just 10.8 billion won in the third quarter before falling into the red in the fourth quarter with a loss of 50.4 billion won. Although the unit returned to the black in the first quarter of this year, profits were marginal at just 4.9 billion won.
 

Lyu Jae-cheol, head of LG Electronics’ home appliance division, explores a range of AI-powered devices with LG Pro Builder members at the company’s exhibition booth during IBS 2025, the International Builders’ Show, in Las Vegas on Feb. 26. [LG ELECTRONICS]

Resilience in home appliances, HVAC and auto parts
 
Other divisions posted solid gains. The home appliance business, which includes refrigerators and washing machines, reported 6.59 trillion won in revenue and 439.9 billion won in operating profit — up 2.8 percent and 2.5 percent, respectively. Despite sluggish consumer demand and rising logistics costs, the unit benefited from a focus on premium products.
 
The eco solution division, which includes heating, ventilation and air conditioning (HVAC) systems, posted 2.64 trillion won in sales and 250.5 billion won in profit, aided by surging demand for air conditioners during an extended heat wave in Korea.
 
Meanwhile, the auto division achieved its best-ever quarterly results, posting revenue of 2.85 trillion won and operating profit of 126.2 billion won, up 5.8 percent and 52.4 percent, respectively, from the previous year. Growth was fueled by higher vehicle sales in Europe and increased premium sales in infotainment.
 

A flag with the LG logo flies in front of LG Electronics’ headquarters in Yeongdeungpo District, western Seoul, on April 7. [YONHAP]

Tariff pressures mount in second half
 
Looking ahead, the company faces further headwinds. From June 23, the United States imposed a 50 percent tariff on steel used in appliances such as refrigerators, washing machines and dryers.
 
“The global home appliance market recovery is expected to be delayed due to uncertainties related to U.S. tariff negotiations and monetary policy in advanced economies,” said Kim Yi-won, senior vice president and head of business management in the home appliance division.
 
“It’s difficult to expect improvements to consumer sentiment or hardware demand in the third quarter,” added Park Sang-ho, senior vice president and head of business management in the MS Division.
 
While LG Electronics did not rule out raising prices, the company emphasized that it would “proceed cautiously.” It said it would focus instead on “production optimization” and “cost reduction.”
 
For instance, LG plans to add production capacity for washing machines in Mexicali, Mexico, starting in September. Though Mexico is also subject to a 30 percent tariff from the United States, the company sees the location as more cost-effective than shipping from Korea, considering overall logistic expenses.
 
To bolster long-term profitability, LG plans to accelerate its shift toward business-to-business segments like automotive components and HVAC, which are less exposed to price volatility. It also aims to expand subscription-based services and its webOS smart TV platform. Additionally, LG will continue targeting the Global South, especially India, where consumer demand remains relatively resilient.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY YI WOO-LIM [[email protected]]

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