Is LG Electronics Facing a 46.6% Drop in Q2 Operating Profit?
Click to start listening
Synopsis
LG Electronics is grappling with a significant operating profit decline of over 46% in Q2 due to rising logistics and tariff costs. This downturn raises questions about the company's future strategies, especially in light of ongoing market challenges.
Key Takeaways
- LG Electronics faces a 46.6% drop in Q2 operating profit.
- Revenue fell 4.4% year-on-year.
- Challenges stem from rising logistics and tariff costs.
- B2B operations showed strong growth despite market pressures.
- Strategic partnerships are key to LG's future resilience.
Seoul, July 7 (NationPress) LG Electronics, a prominent home appliance producer based in South Korea, announced on Monday that its operating profit for the second quarter is projected to have declined by over 46 percent compared to the same period last year, largely due to escalating logistics and tariff costs.
The estimated operating profit for the quarter ending in June stands at approximately 639.1 billion won (US$467.2 million), representing a 46.6 percent decrease from the previous year, according to a regulatory filing from the company.
Additionally, the company reported a 4.4 percent year-on-year revenue drop, totaling 20.74 trillion won. Data on net profit has not been disclosed.
LG's operating profit fell 15.2 percent below the average market estimate, as reported by Yonhap Infomax, the financial data service of Yonhap News Agency.
The final earnings report will be made available soon.
LG Electronics attributed its profit downturn to ongoing challenging business conditions, particularly influenced by shifts in US trade policy.
The company highlighted increased tariff expenses, particularly on steel and aluminum, alongside rising logistics costs and intensified market competition as significant contributors to the profit decline.
Despite these hurdles, LG's business-to-business (B2B) sectors, which include electric vehicle (EV) components, subscription services, and heating, ventilation, and air conditioning (HVAC) systems, showed promising growth during the quarter.
Going forward, LG Electronics intends to prioritize the expansion of its B2B and subscription-driven segments to fortify its long-term business framework.
In a notable move, LG Electronics is collaborating with Saudi Arabia's Shaker Group to develop specialized HVAC systems designed for extreme climates. This partnership will involve universities from both nations to test AI-powered energy efficiency solutions. This initiative follows LG's recent acquisition of a Norwegian hot water company aimed at bolstering its European HVAC presence. The goal is to create climate-specific research and development infrastructure for global markets.
"This collaboration presents an excellent opportunity to enhance our capabilities in HVAC solutions specifically tailored for extremely hot regions," stated an LG Electronics representative.
Point of View
It's imperative to acknowledge that LG Electronics is navigating a complex landscape marked by fluctuating tariffs and logistics expenses. While the decline in profit is concerning, the company's focus on B2B growth and strategic partnerships shows resilience and adaptability. This approach aligns with a broader trend of companies re-evaluating their strategies in response to changing market conditions.
NationPress
26/07/2025
Frequently Asked Questions
What caused LG Electronics' profit decline?
The decline in operating profit was primarily due to rising logistics and tariff costs, particularly influenced by US trade policy changes.
What is LG's estimated operating profit for Q2?
LG Electronics' estimated operating profit for the second quarter is approximately 639.1 billion won (US$467.2 million).
How much did LG's revenue drop?
LG Electronics reported a 4.4% year-on-year drop in revenue, totaling 20.74 trillion won.
What sectors showed growth for LG Electronics?
Despite challenges, LG's B2B operations, including electric vehicle components and HVAC systems, exhibited solid growth during the quarter.
What strategic partnerships is LG pursuing?
LG Electronics is collaborating with Saudi Arabia's Shaker Group to develop specialized HVAC systems for extreme climates.
