LG Electronics’ Q2 operating profit decreases by 46.6% due to increasing tariffs.

LG Electronics, a prominent manufacturer of home appliances in South Korea, announced a significant drop in its second-quarter operating profit, attributing it to the escalating logistics and tariff expenses. The company reported an estimated operating profit of 639.1 billion won (US$467.2 million) for the quarter ended in June, reflecting a substantial 46.6 percent decline from the previous year.

Furthermore, LG Electronics experienced a 4.4 percent decline in revenue compared to the same period last year, amounting to 20.74 trillion won. While specific data regarding net profit was not disclosed, the operating profit fell notably below the average forecast by 15.2 percent based on a survey conducted by Yonhap Infomax, the financial data branch of Yonhap News Agency.

The company highlighted the challenging business environment in the second quarter, citing changes in US trade policy as a primary contributing factor to the profit downturn. LG Electronics pointed to the increased costs of tariffs, particularly on materials like steel and aluminum, alongside rising logistics expenditures and heightened market competition as key drivers behind the profit reduction.

Nevertheless, amid these adversities, LG Electronics witnessed robust growth in its business-to-business (B2B) sector, including segments such as electric vehicle (EV) components, subscription services, and heating, ventilation, and air conditioning (HVAC) systems. The company expressed its commitment to expanding its B2B and subscription-based ventures to fortify its long-term business foundations.

In a strategic move, LG Electronics collaborated with Saudi Arabia’s Shaker Group to develop specialized HVAC systems tailored for extreme climates, exemplified by scorching regions. This partnership, which involves universities from both countries to assess AI-driven energy efficiency solutions, follows LG’s recent acquisition of a Norwegian hot water company to expand its presence in the European HVAC market. The objective of this collaboration is to establish a climate-specific research and development infrastructure that caters to global markets.

An LG Electronics official emphasized the significance of this collaboration in enhancing the company’s capabilities in providing HVAC solutions customized for regions with high temperatures. The company remains focused on leveraging such partnerships and investments to further solidify its position in the HVAC sector and drive innovation in climate-specific technologies for global markets.