LG Electronics increases Q3 profit as mobile business narrows loss

Increased revenue across the board compared to a year ago has seen overall profits rise.

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(Image: LG Electronics)

LG Electronics has increased its revenue for the third quarter by 15 percent year on year to post 15.2 trillion won in sales, which has translated into a one-third boost in earnings before interest, tax, depreciation, and amortisation (EBITDA) to 957 billion won, and operating income spiking by over 80 percent to 516 billion won.

Broken down by business, the company's mobile division saw revenue increase by 8 percent compared to the same time last year, and narrowed its loss from 426 billion won to 375 billion won this quarter.

LG said it had shipped almost 14 million smartphones for the quarter, based on steady sales of its G6 handset, and increased sales of its mid-tier phones such as the Q6, while its profitability was hit by increased material costs and a one-time royalty expense.

The company's home entertainment division reported a quarterly profit record of 458 billion won alongside a record operating margin of 9.9 percent thanks to increased sales of premium televisions.

"LG's strategy to overcome volume competition by expanding the premium component of its TV business focusing on OLED and Ultra HD TVs is proving to be a success," the company said in a statement. "Sales of OLED units by the end of the third quarter were equivalent to the total number of units sold in 2016, which was more than double the 2015 figure."

The only division to fail to increase its profit despite growing revenue was the vehicle components unit, which reported a revenue jump of 29 percent to 873 billion won, and almost doubled its 2016 third quarter loss of 16 billion won, reporting a 29 billion won loss for Q3.

LG said the loss was due to "advanced resource input" in its electric vehicles component, and its new infotainment business. Looking ahead, the company said it expects an increase in electric vehicle production to boost its earnings.

Overall, the company said its fourth quarter sales are set to increase by 10 percent, but operating income would be down on this quarter.

On Thursday, it was announced that LG had updated the software in its home appliances -- such as refrigerators, ovens, dishwashers, and vacuum cleaners -- to close a security hole that allowed an attacker to take control of the devices.

"As more and more smart devices are being used in the home, hackers will shift their focus from targeting individual devices, to hacking the apps that control networks of devices," said Oded Vanunu, head of products vulnerability research at Check Point, which was responsible for finding the issue. "This provides cyber criminals with even more opportunities to exploit software flaws, cause disruption in users' homes, and access their sensitive data."

The vulnerability only applied to the LG SmartThinQ ecosystem, with researchers saying it wouldn't be possible for attackers to use the flaw to access non-LG devices on the network.

Researchers disclosed the vulnerability to LG in July, and the appliance manufacturer issued an update to fix it in September.

In recent weeks, it has been reported the LG-made Google Pixel 2 XL has been suffering from screen burn-in after a week of use. Google said it is currently testing a software update to address the issue.

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