Net profit came to 514 billion won (US$462 million), rising sharply from 268 billion won posted a year earlier, the company said through a regulatory filing. (Image: Yonhap)
SEOUL, July 27 (Korea Bizwire) – LG Electronics Inc., South Korea’s No.2 electronics firm, said Thursday its second-quarter net profit nearly doubled from a year earlier on the back of a steady rise in home appliance goods, but its mobile phone business continued to suffer losses due to weaker than expected sales of flagship smartphones.
Net profit came to 514 billion won (US$462 million), rising sharply from 268 billion won posted a year earlier, the company said through a regulatory filing.
Operating profit came to 664 billion won in the April-June period, up 13.6 percent from 584.6 billion won posted last year. The figures are in line with the estimate of 664.1 billion won announced by LG through a guidance report earlier this month.
Sales also advanced 3.9 percent to reach 14 trillion won over the cited period, the company added.
The net income hovered below the estimate of 581 billion won compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, based on a survey of 19 South Korean brokerage houses.
LG Electronics said the mobile communications division, which oversees the smartphone business, posted an operating loss of 132.4 billion won because of sluggish sales of premium devices, coupled with the increase of expenditures on the flagship G6 smartphone.
LG Electronics has been posting quarterly operating losses since the third quarter of 2015. The company’s operating loss from the mobile division reached a whopping 467 billion won in the fourth quarter of 2016.
The figure managed to reach an operating loss of 200 million won in the first quarter, casting hope over a possible recovery, but the latest announcement emerged as yet another challenge for LG.
LG Electronics acknowledged that the sales of the G6 smartphone fell behind expectations, but claimed the performance still hovers above that of the G4 and G5 smartphones.
The company said it expects the combined sales of the G6 to hover above 4-5 million units.
The home appliance & air solution unit posted an operating profit of 465.7 billion won, up 7.4 percent from a year earlier.
LG said the growth was attributable to the robust sales in the North American market, while the company also posted strong sales of home appliance products, such as air purifiers and drying machines on home turf.
The home entertainment business posted an operating profit of 343 billion won, down 3.8 percent on-year due to the rising prices of panels.
The company, however, expanded sales of premium OLED and Ultra HD TVs, which led to a slight increase in sales.
The vehicle component business posted an operating loss of 16.4 billion won, as LG continued to expand investment to secure future growth engines.
For the third quarter, LG Electronics said it expects the demand for air purifiers and dryers to increase in South Korea, while the revitalization of the global economy will lead to a rise in demand for home appliances in North America and Europe.
Accordingly, LG said it plans to expand sales of premium home appliances abroad to secure stable profit sources.
LG also said as the seasonal demand for TVs is expected to rise in the second half, the company will focus efforts on promoting premium products.
As for the mobile business, the company said it will continue to diversify its portfolio, and seek to recover sales through a new flagship set to be released later this year, presumably the V30.
Shares of LG Electronics closed 2.06 percent lower at 66,500 won on the main bourse Thursday. The second-quarter report was announced before the market closed.
(Yonhap)
