LG Electronics said Thursday that its second-quarter operating profit would be down 12% year on year due to lower demand for TVs and home appliances, as well as rising inflation and raw material costs. According to its earnings guidance for the April-June period, the tech company's operating profit fell 12 percent year on year to 791.7 billion won ($610.5 million).
According to Yonhap Infomax, the financial data firm of Yonhap News Agency, the operating profit was 1.2 percent lower than the average estimate. The value of sales increased by 15% to 19.47 trillion won. Net income data was not available.
Analysts predict lower earnings for LG in the coming year, as pandemic-driven pent-up demand for television has slowed and rate increases in major economies to control inflation have weakened consumer spending power. High shipping costs, combined with supply chain disruptions, are also hurting the company's bottom line.
The company reported Thursday that its TV business shrank in the third quarter, owing to rising marketing costs and people spending less time at home as the COVID-19 pandemic recedes. While overall consumer demand fell, the company said premium home appliances remained in high demand, particularly in North America, and continued to grow by double digits.