Earnings at LG Electronics Inc. nearly halved in the second quarter after Trump administration’s tariff hikes pushed up raw material costs and made its products more expensive.
The South Korean home appliances giant ramped up marketing spending to counter soft demand, while conflicts in the Middle East led to higher logistics costs, the company said on Monday.
Its operating profit decreased 46.6% to 639.1 billion won ($467 million) in the April-June quarter from the year prior on a consolidated basis.
Compared with the previous quarter, the profit tumbled 49.2%, missing the market consensus of 753.3 billion won, according to Yonhap Infomax.
Revenue edged down 4.4% on-year to 20.74 trillion won in the second quarter. Quarter-on-quarter, it dropped 8.8%.
Bucking the trend, its automotive electronics business posted year-on-year gains in both operating profit and revenue as LG Group pushes to foster in-vehicle systems as a key growth pillar.
Washington imposed a 10% universal tariff on imports effective in April, following steel and aluminum tariffs introduced in March. The moves undermined its price competitiveness in the US and drove up raw material costs.
Looking ahead, LG said it will focus on quality-based growth led by B2B, subscription-based services and software sales as it aims to transform into a platform-based tech giant.
As part of its push into the ventilization and air conditioning (HVAC) products market, a key B2B segment, LG recently acquired OSO Hotwater, one of Europe’s top providers of water heating solutions.
“In the second half, we will solidify our OLED TV leadership with new wireless products, while enhancing the competitiveness of our webOS smart TV platform through expanded content offerings in gaming and art,” LG said in a statement.
The world’s largest OLED TV maker aims to strengthen its position in the premium TV market with upgrades to its proprietary webOS smart TV operating platform, its brighter OLED TV displays and an advanced wireless video transmission system.
LG will release divisional results for the second quarter on July 25.
By Yeonhee Kim
yhkim@hankyung.com
