LG Net Profit Marred By Recall Payment To General Motors
Economic headwinds and lower consumer demand has seen LG’s net profit drop by over 40 percent in second quarter-by-quarter results.
LG said that while overall profit remained strong, operating income was 6.3 percent lower than the second quarter last year “primarily due to a one-time second-quarter 2023 provision”.
That provision involved reimbursing General Motors up to AU$2.8 billion. GM had to recall and fix faulty LG batteries in Chevrolet Bolt EVs due to concern about fire risks. That single event hurt LGs bottom line.
That aside, the company kicked goals. Over the same period, LG said it recorded the highest second-quarter revenues in the company’s history. Consolidated revenue was 20 trillion won (AU$23 billion) with operating profit of 741.9 billion won (AU$855.5 million), up 40 per cent.
“Despite intensified market conditions, the business unit recorded strong profitability on the back of increased sales of high-demand products such as air conditioners and energy efficient heat pump-enabled products.”
LG says it will upscale production of its heat pumps and energy storage systems as demand for green technologies grows in Europe, North America and worldwide. It sees the electrification trend as a chance for growing its heat ventilation and air condition system products.
It cited “challenging business conditions” in the worldwide consumer electronics industry impacting its home entertainment company which recorded an operating profit of AU$142.5 million year-on-year. It indicated it was moving way from consumer appliances and TV for in-home services, AV and components.
LG said it had experienced slowing demand for its IT products. said its business solutions company saw a second-quarter revenue of AU$1.5 billion. “Both revenue and operating profit declined slightly from the same period last year due to the persistent softening of demand for IT products,” it said. “From the third quarter, demand for IT products is expected to show a gradual recovery compared to the first half.
“In the midst of this, LG plans to actively expand sales of monitors and laptops equipped with gaming features and OLED displays.”
The Korean tech giant confirmed it would launch its LG ThinQ UP 2.0 home appliances featuring personalisation, subscriptions and services this quarter. It is tipped to be launched at Berlin’s IFA technology show in September.
LG recently detailed a new vision for the company