LG Electronics Expects Lower Quarterly Operating ProfitUpdate
By Kwanwoo Jun
LG Electronics forecast a 5.7% drop in first-quarter operating profit, largely meeting market expectations, though the consumer-electronics giant sustained steady revenue growth.
The mixed preliminary quarterly results came as LG Electronics, in response to an expected global economic slowdown, continued to push for new business growth initiatives such as home-appliance subscription services, as well as its heating, ventilation and air-conditioning segment for corporate clients.
The South Korean company said in a preliminary earnings report Monday that its operating profit for the January-March period could come in at 1.259 trillion won, equivalent to $862.6 million, compared with 1.335 trillion won a year earlier.
The projected earnings were largely in line with a FactSet-compiled consensus estimate of 1.252 trillion won for the quarter.
Revenue is expected to have risen 7.8% to 22.745 trillion won, LG Electronics said, slightly beating analysts' estimate for the first quarter of 2025. That's the first time that the company's first-quarter revenue has exceeded 22 trillion won.
LG Electronics said its new business-to-business and eco-solution segments primarily drove first-quarter revenue growth, which was also supported by home-appliance subscription services and other new consumer services. Its fast-growing heating, ventilation and air conditioning business began operating as an independent company in the first quarter, the company added.
Some market analysts expect freight rates, which had weighed on the company's earnings in 2024, to fall this year, helping to reduce shipping costs and improving earnings.
In response to President Trump's sweeping tariff plans, the company is preparing to relocate some of its production to the U.S. It has recently completed expanding and adjusting assembly lines at its plant in Tennessee to manufacture refrigerators, ovens and other home appliances, which are currently being built in Mexico.
Shares of LG Electronics were recently 5.4% lower on Monday, tracking a broad selloff in local stocks amid concerns over Trump's new tariffs.
LG Electronics is due to release its full quarterly results later this month.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com