LG Electronics Inc., which posted a robust operating profit for the first quarter, especially in the home appliances business, is anticipated to focus on its premium products to maintain sound returns, industry watchers said Thursday.
South Korea's No. 2 tech giant posted sales of 4.6 trillion won (US$4 billion) and an operating profit of 52 billion won from its home appliance business for the January-March period, which translates into an operating margin of 11.2 percent.
It marks the first time that LG posted an operating margin in the double-digit range in the home appliances sector.
The figure beats the operating margins of Whirlpool Corp. and Electrolux, which posted 5.5 percent and 5.3 percent, respectively, for the first three months of the year.
Industry watchers said the strong performance is attributable to high-end products, such as the LG Signature series, which posts higher profitability compared with more affordably priced products.
LG Electronics' home appliance business posted an operating margin of 3.1 percent in 2015, but the figure soared to 7.4 percent last year after releasing the LG Signature line of premium products.
Accordingly, the company is set to roll out aggressive investment measures and is set to inject 576.5 billion won this year.
"Although the home appliance business is widely seen as an industry with a low technology barrier, Chinese firms are still facing hurdles (in chasing traditional players)," an LG Electronics official said. "We plan to focus on distinctive and premium products." (Yonhap)