[Photo by Han Joo-hyung]
LG Electronics Inc. minus money-losing smartphone business will likely extend hot streak in earnings by finishing 2021 with another record figures in top and bottom line, given its leadership in TV and high-end appliances amid global economic recovery.
Analysts are projecting the South Korean consumer electronics giant to earn 3.8 trillion won ($3.4 billion) in operating profit on sales of 69.5 trillion won in 2021. Some project the firm’s profit for full 2021 to reach 4 trillion won. It had performed its best so far last year with operating profit of 3.2 trillion won and sales of 63.3 trillion won.
The company on Wednesday issued guidance on best quarterly earnings – 1.5 trillion won in operating profit and 18.8 trillion won in sales - in the first three months as pent-up demand picked up in line with the Covid-19 vaccine rollout across the globe.
By July, it will be completely free from the smartphone business that ate up its bottom line with over 5 trillion losses over the last five years.
Analysts estimated that the firm’s operating profit would improve by 500 billion won from the exit.
LG Electronics plans to devote more on automotive electronics, artificial intelligence, big data, and robotics.
The company is in process to launch a joint venture, tentatively named LG Magna e-Powertrain Co. with the world’s No. 3 auto parts supplier Magna International Inc. on July 1. The JV will make powertrains and drive systems for electric vehicles.
The closure of mobile phone business can lead to bigger investments in home appliance and auto parts businesses, said Noh Kyung-tak, analyst at Eugene Investment & Securities. Its automotive component business is expected to turn around later this year, he added.
By Park Jae-young and Cho Jeehyun
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