LG Electronics Preliminary 3Q
Lg Electronics (066570.KS) reported preliminary 3rd quarter sales and operating profit. Sales were up 5.5% q/q but down 1.4% y/y and right on consensus, while operating profit was up 7.7% q/q but down 8.4% y/y and 11.3% above OP consensus. While the company does not give details until the full conference call at the end of this month, they did indicate that the competition in the TV space was particularly intense (Same issue in 2Q) which caused them to lower prices and increase marketing, and that US steel tariffs (50%) took some of the profit out of the US appliance business. They also indicated that the voluntary employee retirement program (up to 3 years of salary), which was initially only for the MS division, became company wide in September, and affected OP on a one-time basis.
On the positive side the company indicated continued strength in the automotive display space, including positive expectations for 4Q based on a strong 3Q backlog. They see appliances as ‘steady’ going forward and have worked toward reducing the overall impact of US tariffs by ‘Site optimization’ and ‘resource allocation’’. The company also singled out server cooling systems are an area that saw strong orders. The company has proposed the listing of its Indian subsidiary in order to fund capital intensive growth over the mid-term. More details at the end of the month.
On the positive side the company indicated continued strength in the automotive display space, including positive expectations for 4Q based on a strong 3Q backlog. They see appliances as ‘steady’ going forward and have worked toward reducing the overall impact of US tariffs by ‘Site optimization’ and ‘resource allocation’’. The company also singled out server cooling systems are an area that saw strong orders. The company has proposed the listing of its Indian subsidiary in order to fund capital intensive growth over the mid-term. More details at the end of the month.
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