TV and home appliance business support LG Electronics Q3 operating profit increased by more than 40%

- Oct 08, 2018-

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According to the Yonhap News Agency, on October 5, South Korea's consumer electronics and home appliance manufacturer LG Electronics released its third-quarter results guidance report. Due to strong support from the TV and home appliance business, its operating profit in the third quarter soared 44.4% year-on-year.

 

According to the performance guidance report released by LG Electronics, from July to September, LG Electronics achieved an operating profit of 745.5 billion won (about 659 million US dollars), compared with 516.1 billion won in the same period last year. In the third quarter, LG Electronics achieved sales of 15.4 trillion won, a year-on-year increase of 1.3 percentage points.

 

LG Electronics’ operating profit in the third quarter was slightly lower than the market forecast of 771.7 billion won by 15 brokers in South Korea. The 15 companies’ LG Electronics’ third-quarter sales are expected to be 15.8 trillion won.

 

LG Electronics did not disclose in detail the specific performance of each business in the performance guidance report, and the final revenue will be released at the end of this month.

 

Industry observers believe that the TV and home appliance business is the main driver of LG Electronics' operating profit growth in the third quarter.

 

However, the LG Electronics smartphone business is expected to experience another operating loss in the third quarter. The department has been losing money since the second quarter of 2017.

 

According to forecasts, the loss of LG Electronics' mobile business in the third quarter was approximately 160 billion won, an improvement from the operating loss of 38.1 billion won in the same period last year.

 

If the operating profit realized through the last-minute adjustment is also counted as a loss, the LG Electronics smartphone business has actually suffered losses for 14 consecutive quarters.

 

In the first quarter of last year, the LG Electronics smartphone business achieved operating profit of 3.7 billion won, including the accessories business.

 

Although LG Electronics is trying to revive its smartphone business with the new flagship phone V40 ThinQ, industry observers believe that this model is equipped with an amazing five cameras, compared to Samsung Electronics and Apple products. The phone still does not offer differentiated features.

 

LG Electronics also plans to expand its portfolio of low-cost models to boost sales.

 

Industry observers expect that if the mobile sector can reduce losses by reducing marketing costs, LG Electronics may achieve better returns in the next few quarters.

 

In cooperation with the Austrian automotive lighting system company ZKW Group, LG Electronics' auto parts business is expected to start generating full profits next year, and the company was recently acquired by LG Electronics.