LG Electronics reported a steep decline in second-quarter earnings as the South Korean appliance maker struggled with higher costs from trade policies and supply chain disruptions.
Operating profit tumbled 46.6% to 639.1 billion won ($467 million) for the April-June period, missing analyst estimates of 753.3 billion won. Revenue dropped 4.4% to 20.74 trillion won ($15.2 billion), marking a challenging quarter for the company that just set annual revenue records in 2024.
The Trump administration’s tariff hikes pushed up raw material costs and made LG’s products more expensive, forcing the company to ramp up marketing spending to counter soft demand. Conflicts in the Middle East led to higher logistics costs, adding pressure to margins.
While LG’s home appliance and business-to-business segments maintained “sound profitability,” the media and entertainment division faced headwinds from declining demand and elevated LCD panel prices. The company increased marketing expenses to counter intensifying competition in the television market.
LG’s management outlined plans to focus on “qualitative growth” through expanding higher-margin B2B sectors and subscription-based services. The strategy represents a shift away from volume-driven sales as the company grapples with an increasingly challenging external environment.
The automotive electronics business bucked the trend, posting year-on-year gains in both operating profit and revenue as LG positions in-vehicle systems as a growth pillar.
