By Kwanwoo Jun


LG Electronics projected a solid earnings rebound, driven by record first-quarter revenue and improving profitability in its home-appliance, television and vehicle-component businesses.

The South Korean consumer-electronics giant guided for an above-consensus operating profit in the January-March period after posting its first loss in nine years in the previous quarter, raising hopes for a recovery this year.

"The improvement was driven by proactive tariff response measures, including production optimization, as well as stronger company-wide cost structure improvement efforts focused on profitability-based growth," LG said Tuesday.

Analysts said the company's earnings likely bottomed out last year amid weak demand, rising costs and restructuring. They expect profitability to improve as LG increases U.S. local production to avoid tariffs and reduces labor costs through an early-retirement program in its TV business.

LG said its media-entertainment business, which includes televisions, returned to profit in the first three months of the year, while its home-appliance business maintained growth, supported in part by appliance subscriptions and web-based platform services. Its vehicle-component segment also posted steady growth on a solid order backlog, it said.

In a preliminary earnings report, the company said operating profit likely reached 1.674 trillion won, equivalent to $1.11 billion, for the quarter, exceeding market expectations.

That would be a 33% jump from the previous year and reverse an operating loss of 109.00 billion won in the preceding quarter. Analysts had expected an operating profit of 1.336 trillion won for the first quarter, according to a FactSet-compiled consensus estimate.

Revenue is expected to have risen 4.4% to 23.733 trillion won, marking a record for the first quarter.

Shares in LG Electronics had already climbed nearly 20% this year through Monday, boosted by investors' bets on a strong 2026 earnings rebound. The Seoul-listed stock was recently down about 2.5% in Tuesday afternoon trading.

HSBC analyst Ricky Seo said ahead of the preliminary results that the company's auto-component division likely logged solid margins, supported by steady infotainment and e-powertrain shipments in the first quarter. A potential return to profit at its flat-panel affiliate could have supported earnings, he said.

Kangho Park of Daishin Securities said LG's TV business could return to profit this year after exiting unprofitable assembly lines and streamlining its workforce. Park said LG's home-appliance segment could also see margin improvement as the company increases local production in the U.S. and Mexico to mitigate the impact of tariffs.

Nomura analyst Eon Hwang said he expects a growing share of LG's revenue to come from new businesses, such as appliance subscriptions, web-based services and its heating, ventilation and air-conditioning segment.

Adding to the positive tailwinds, Moody's upgraded LG's credit rating to Baa1 from Baa2 earlier this year, citing lower debt, an expected earnings recovery and investment in new businesses.

The company is scheduled to release its full quarterly results later this month.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

04-07-26 0120ET