Did LG Electronics' Q3 Operating Earnings Decline Due to Tariffs?
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Synopsis
LG Electronics faces challenges in Q3 as rising tariffs lead to an estimated 8.4% decline in profits. Despite these hurdles, the company shows resilience with growth in its B2B sector, indicating strategic shifts for future growth. This article explores the implications of these financial results and what they mean for LG's future.
Key Takeaways
- LG Electronics reported an operating profit decline of 8.4% in Q3.
- Revenue also decreased by 1.4% year-on-year.
- Profit decline attributed to rising tariff costs.
- B2B operations, particularly in EV components, showed growth.
- Strategic focus includes expanding B2B and subscription services.
Seoul, Oct 13 (NationPress) LG Electronics, a prominent manufacturer of home appliances in South Korea, announced on Monday that its operating profit for the third quarter is projected to have decreased by over 8 percent compared to the previous year, primarily due to escalating tariff expenses.
The estimated operating profit for the three months ending in September stood at approximately 688.9 billion won ($482.6 million), reflecting an 8.4 percent decline year-on-year, as disclosed in a regulatory filing reported by Yonhap news agency.
Additionally, the company's revenue fell by 1.4 percent on a yearly basis to 21.87 trillion won. Information regarding net income was not disclosed.
Despite this decline, the operating profit surpassed market predictions, exceeding the average estimate by 13.9 percent, according to a survey conducted by Yonhap Infomax, a financial data firm.
LG Electronics attributed the decrease in profits to the increasing burden of tariffs, particularly those resulting from alterations in U.S. trade policies.
The company also noted that its voluntary retirement initiative contributed to the unfavorable financial outcome.
However, LG Electronics experienced robust growth in its business-to-business (B2B) sector, including components for electric vehicles (EVs), during the quarter, while its traditional home appliance segment retained its competitive edge.
The company plans to continue expanding its B2B and subscription-based services to reinforce its long-term operational foundation.
Significantly, the anticipated initial public offering (IPO) of its Indian subsidiary is expected to facilitate capital accumulation for restructuring its business model and identifying future growth opportunities. The final earnings report will be released later.
Earlier, LG Energy Solution reported on Monday that its third-quarter operating profit is likely to have surged by 34.1 percent year-on-year, fueled by strong demand for energy storage systems (ESS) in the United States. For the three months concluding in September, the operating profit is estimated to have increased to 601.3 billion won ($422.8 million) from 448.3 billion won during the same period last year, as stated in a regulatory filing.
Point of View
It's imperative to recognize LG Electronics' ongoing efforts to adapt to changing market conditions. While the decline in operating profit due to tariffs presents challenges, the company’s focus on B2B growth and strategic restructuring displays a proactive approach that aligns with the evolving landscape of the home appliance industry.
NationPress
13/10/2025
Frequently Asked Questions
What caused LG Electronics' Q3 profit decline?
The decline in LG Electronics' Q3 profits was primarily attributed to rising tariff costs due to changes in U.S. trade policies.
How much did LG's operating profit drop?
LG's operating profit for Q3 is estimated to have dropped by 8.4 percent from the previous year.
What areas of LG's business showed growth?
LG's business-to-business (B2B) operations, including electric vehicle components, experienced solid growth despite the overall profit decline.
What strategy is LG Electronics pursuing for future growth?
LG Electronics aims to expand its B2B and subscription-based businesses to strengthen its long-term business fundamentals.
Is LG planning an IPO for its Indian subsidiary?
Yes, LG plans to complete the initial public offering (IPO) of its Indian subsidiary, which is expected to raise capital for business restructuring.
