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Thursday, August 20, 2020

Is LG Electronics becoming stronger amid pandemic? - Korea Times

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A visitor to LG Electronics' Signage Tech Seminar event takes a look at the company's toy-brick-like commercial displays at the Grand InterContinental Seoul Parnas hotel, Tuesday. / Courtesy of LG Electronics
A visitor to LG Electronics' Signage Tech Seminar event takes a look at the company's toy-brick-like commercial displays at the Grand InterContinental Seoul Parnas hotel, Tuesday. / Courtesy of LG Electronics

By Baek Byung-yeul

LG Electronics is expected to get stronger despite the pandemic-driven economic slump as industry analysts see the company has found a chance to the expand sales volume of its home appliances that have enhanced healthcare features.

The company was badly affected by the COVID-19 pandemic, watching its electronics products sales decrease in the second quarter. But as more people are paying attention to health and personal hygiene, they claimed the company will be able to expand its market share in the appliance market.

Also, with its powerful electronics products lineups, they added LG will likely evolve into an "appliance platform" company, supplying a whole set of its products, ranging from heating, ventilation and air conditioning products and displays to robot products, to its business-to-business customers.

In the home appliance business, which has been the firm's long-time cash-cow, LG is expected to have a chance to expand its customer base," Noh Geun-chang, an analyst at Hyundai Motor Securities, said during a recent virtual interview. "Due to the virus pandemic, demand for LG's Styler steam closet, dishwasher and other items that have enhanced health care features is estimated to increase."

The company announced its sales of the Styler steam closet in overseas countries such as China, Russia and Canada in the first half of 2020 were increased by more than 50 percent compared to the same period in 2019. The figure doubled in Taiwan, it said.

Due to the pandemic, LG elaborated Styler is becoming a vital home appliance for consumers all over the world.

"There has been increasing demand for health and personnel hygiene products in overseas markets," said Kwak Do-young, head of LG's home appliance and air solution division's overseas business team. "Taking advantage of LG Styler, which has a superior steam sanitization feature and moving hanger that reduces wrinkles in clothes, we will promote the new type of clothing care cleaning system all over the world."

Though it's a bit early to be certain, LG looks tobe gradually becoming a platform company in the B2B market, the analyst said.

"For commercial and public places such as hotels, schools and hospitals, LG is providing a whole package of its products ranging from air controlling products, solar energy generators, displays and other appliances," he said. "By simply contacting LG, its B2B customers can transform themselves into a high-tech place."

In the second quarter, the company's sales stood at 12.83 trillion won ($10.8 billion) and posted 495.4 billion won of operating profit, down 17.9 percent and 24.1 percent year-on-year, respectively. Analysts' consensus indicated LG's operating profit will keep rising in the third quarter. They presumed the company will generate 2.75 trillion won in operating profit, up about 15.5 percent from the previous quarter.

Plus, investors are recommended to pay attention to LG Electronics stocks as the company is relatively free from the ongoing political-economic issues such as the U.S. government's Huawei ban and the decreasing price of DRAMs.

However, to attract more investors into the company, LG also needs to ensure them that it has been trying to reduce losses from the money-losing smartphone business and vehicle component sector.

In the second quarter, LG extended its operating loss to 21 straight quarters after posting a 206.5 billion won loss. Given it posted an operating loss of 313 billion won in the same period last year, the company is gradually narrowing down the deficit. The vehicle component business unit, which supervises electrical car components, posted an operating loss of 202.5 billion won.

"Due to the decreased vehicle demand, the vehicle component division was hit hard in the second quarter. But what is good is the division is expected to recovery in the following quarter," Lee Dong-joo, an analyst at SK Securities, said in a report.
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August 20, 2020 at 03:00PM
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Is LG Electronics becoming stronger amid pandemic? - Korea Times

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