Home appliances boost LG's Q2 profit after mobile and vehicle component losses
LG Electronics has reported its results for the second quarter of 2018, posting 771 billion won in operating profits, up 16.1 percent over the same period last year, thanks mainly to the company's home entertainment and appliance businesses.
Consolidated global sales were recorded as 15.02 trillion won for the three-month period, with second-quarter sales increasing 3.2 percent.
LG's mobile arm recorded an operating loss of 185.4 billion won, off the back of 2.07 trillion won-worth of sales.
The company said the decline in mobile sales during the quarter was due to the slowing growth of the global smartphone market and a decline in mid- to low-end smartphone sales in Latin America.
"The second-quarter operating loss was largely due to contracting sales and increased marketing investments to support new flagship smartphone launches," LG wrote. "With competition in the premium smartphone category expected to intensify and growth to remain stagnant in the second half, the company will seek to further improve its business structure and increase sales of the new premium LG G7 ThinQ and LG V35 ThinQ flagship smartphones in key markets around the world."
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LG's Vehicle Components Company also returned a loss for the quarter, reporting an operating loss of 32.5 billion won. Sales did however increase 3.9 percent from the second quarter last year to 872.8 billion won. LG said this was due to the commencement of mass production on new projects.
According to LG, the quarterly operating loss reflects increases in raw material prices such as memory and additional resource requirements for new projects. It also said uncertainties in the global auto industry and in US trade policy will continue to challenge the business unit.
LG Home Appliance & Air Solution division delivered 5.26 trillion won in sales for the quarter, with 457.2 billion won in operating profit. First-half revenues for LG Home Appliances and Air Solution were the highest in company history, it said, exceeding 10 trillion won for the first time.
Also contributing to the overall profit, the LG Home Entertainment reported second-quarter operating profit of 407 billion won, on sales of 3.82 trillion won.
LG said revenues increased 4.1 percent from the 2017 quarter due to sales of LG OLED TVs, LG SUPER UHD TVs, and other premium products.
Operating income increased 44.1 percent from the second quarter last year.
Lastly, the LG Business-to-Business reported 39 billion won in operating profit, on 588.5 billion won in sales.
LG said it is entering the second half of the financial year with an "intense focus on cost competitiveness and profitable growth".
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