LG Electronics sees significant growth in US home appliances

South Korean LG Electronics Inc. expects to see significant first-quarter revenue growth in its home appliances business, driven by pent-up consumer demand, particularly in the US market.

Analysts expect LG Electronics to post quarterly operating profit of 1.12 trillion won ($990 million) on revenue of 17.1 trillion won on a consolidated basis when the company reports its second-quarter results on Wednesday, up respectively 126% and 33% from a year ago.

If earnings in the second quarter are in line with market consensus, it would be the first time the company has posted operating profit above 1 trillion won for the second consecutive quarter. LG posted 1.52 trillion won in operating profit in the first quarter.

The company’s strong growth is driven primarily by robust overseas sales, particularly in the US market, industry officials said.

In the first quarter, LG’s total sales were 10.81 trillion won, and 40% of that, or 4.29 trillion won, came from the US market.

The booming housing market in the US, as young Americans tried to buy new homes in the long-term work-from-home and online learning environment, has fueled an increase in demand for new home appliances, an LG Electronics official said.

For the full year of 2020, the company’s Home Appliances and Air Solutions (H&A) division reported 22.27 trillion gains in global sales, up 3.5% from the prior year. In the US market alone, LG’s home appliance sales grew 19% year-on-year to about 6 trillion won.

INSTALLATION INCREASE IN US MARKET

As the global economy is rapidly recovering from the pandemic, LG has ramped up production facilities in four of its key markets, including the US, to meet rising demand.

In the US, one of LG’s largest overseas markets, the company said it will spend $20.5 million to increase the capacity of its Tennessee washing machine plant.

The expansion at the plant with an annual production capacity of 1.2 million washing machines comes after the company has seen double-digit sales growth in the North American market in recent years.

LG is also expanding its factory in Mexico to produce more refrigerators and microwave ovens that will be shipped to the US market.

Analysts said LG is likely to record its best-ever home appliance sales this year and Whirlpool Corp. will overtake as the world’s largest manufacturer of household, kitchen and laundry appliances.

The company posted record sales and operating profit in the first quarter of this year, fueled by strong sales of a range of premium consumer goods sold under the LG Objet Collection brand.

Write to Shin-young Park at [email protected]

In-Soo Nam edited this article.