Business

LG's Q2 profit drops due to low OLED and mobile sales

LG's second quarter profit saw a 15.4% decline from lower TV profits and sales and losses from mobile, but overall sales increased 4.1% thanks to record sales from its home appliances business.

Written by Cho Mu-Hyun, Contributing Writer July 29, 2019 at 11:56 p.m. PT

LG Electronics saw operating profits drop of 15.4% compared to the same period a year prior but revenue has increased thanks to record sales from its home appliances business.

The South Korean electronics maker's Q2 operating profits were 652.3 billion won ($559.4 million). Revenue, meanwhile, rose 4.1% from a year ago to 15.63 trillion won ($13.4 billion).

The drop in profits is due to continued losses from its mobile business and slower-than-anticipated sales of its OLED TVs.

LG's mobile business continues to operate at a loss, posting an operating loss of 313 billion won, which adds another quarter to its streak of being in red. To make matters worse, the mobile business' revenue fell 21.3% to 1.61 trillion won, which the company has attributed to aggressive pricing by Chinese brands.

LG had gained some headway with the V50 ThinQ 5G launch in South Korea earlier this year, helped by mobile carriers giving subsidies in May, but sales figures quickly dropped again due to the sustained popularity of the Galaxy S10 5G.

The company's TV business, called Home Entertainment Company, also saw revenue drop 4.5% to 3.67 trillion won. For the quarter, it posted operating profits of 205.6 billion won, a near 50% drop from last year's 407 billion won in the same period.

LG attributed the drop to a decline in demand in Europe and Latin America.

Europe had previously been a stronghold for LG in the premium TV market for the past couple of years but Samsung has hit back with its price-competitive, larger-screened QLED offerings.

LG's home appliance business on the other hand, continues its stellar profit streak to post 6.1 trillion won in sales in the quarter. The 6.1 trillion won figure is the highest ever for the business. Operating profits stood at 717.5 billion won, which was also the highest ever for the business in the second quarter.