X
Tech

Despite the G4, lower smartphone and TV sales leave LG with a 'challenging' quarter

LG's hopes that its G4 flagship would boost second quarter profits haven't materialised.
Written by Liam Tung, Contributing Writer

LG has reported slow second quarter results thanks to consumers' loss of appetite for premium smartphones and TVs.

The South Korean electronics firm described the quarter as "challenging", recording a slim operating profit of KRW 244.1bn ($222m), down 60 percent from the KRW 610bn ($530m) of the corresponding quarter last year.

The company cited a sluggish global TV market and weaker demand in the premium smartphone segment, which it had been targeting with the recent launch of its flagship LG G4.

According to Reuters, LG's profits were well below analysts' estimate of KRW 395bn ($340m).

Reuters noted that analysts have slashed forecasts for LG in recent weeks due to soft global TV sales, weaker currencies in emerging markets that sap profit margins, and the belief that the G4 has failed to offer a compelling alternative to Apple's iPhone 6 and 6 Plus and Samsung's Galaxy S6 phones. That's left LG's mobile unit with an operating profit for the quarter of KRW 0.2bn.

LG said it shipped 14.1 million smartphones for the quarter, down three percent from the same period last year. However, revenues in North America jumped 36 percent thanks to greater interest in the company's mid-range smartphones and tablets.

"Although overall profitably was affected by weaker demand in the premium segment in the domestic Korean market, LG sold more than 8.1 million LTE smartphones worldwide in the quarter, its highest ever," the company said in a statement.

"While the second quarter was more challenging than expected, LG is confident it can recover lost ground in the third quarter with new competitive products and more effective marketing initiatives," it added.

The company said it plans to double down on its dual strategy of premium devices as well as mid-range smartphones targeting emerging markets.

LG executives earlier this year said the company expected to sell eight million G4 smartphones in 2015 and 12 million over the lifecycle of the device. The G4 was released in plastic and leather editions but LG is considering metal for the G5. Earlier this month it launched the lower-specced G4 Beat hoping to scoop up consumers who wouldn't fork out for the G4.

According to analyst firm IDC, LG slipped out of the top five smartphone vendors by global shipments in the second quarter. The Korean company was eclipsed by Chinese rivals Xiaomi, which shipped 17.9 million smartphones in the period, and Lenovo, which shipped 16.2 million.

Read more on LG

Editorial standards