LG Elec’s Q3 OP misses estimates due to extended mobile division losses

2017.10.11 09:35:02 | 2017.10.11 09:36:54

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South Korea’s LG Electronics Inc. on Tuesday reported an 80 percent on-year surge in its third quarter operating income thanks to brisk sales of its home appliances products, but fell short of market expectations due to extended losses at its mobile division.

LG Electronics said in a regulatory filing that its preliminary operating profit for the July-September period surged 82.2 percent to 516.1 billion won ($453.7 million) from a year ago. Its sales reached 15.2 trillion won, up 15.2 percent over the same period. Sales exceeded analysts’ projection of 14.5 trillion won, but operating income came below expected 573.2 billion won. Final earnings results including its quarterly net profit and individual earnings of each division will be announced later this month.

Disappointed by the preliminary results, shares of LG Electronics finished 1.94 percent, or 1,600 won, lower at 80,800 won on Tuesday.

Market analysts suspected the weaker-than-expected operating profit was due to widened losses at the company’s mobile and communication (MC) division from increased marketing costs for its latest mid-priced smartphone Q series and premium smartphone V30 in the second half of the year.

Park Won-jae, an analyst at Mirae Asset Daewoo Securities Co., said LG Electronics fared well in its TV and home appliances businesses but did badly again in its mobile division. “LG’s aggressive marketing campaigns seem to have failed to prop up sales of the company’s (new) smartphones after new releases by Samsung Electronics Co. and Apple Inc. have distracted its loyal customers,” Park added.

In the previous quarter, LG Electronics again failed to return to profit due to tepid sales of its much-hyped flagship G6 smartphone. The company hoped the latest version of mid-priced smartphone Q series and premium smartphone V30 could renew appetite for LG smartphones, but the latest financial results indicated they have not succeeded in doing so and the company’s mobile division remained in red for 10 quarters in a row in the July-September quarter.

For the first nine months of the year, LG Electronics raised 44.4 trillion won in sales, up 9.5 percent from a year ago, and 2.1 trillion won in operating income, up 53.1 percent over the same period, the company said Tuesday.

By Lee Dong-in

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