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LG Electronics’ Profits Tumbled by Half in Q2 due to Slow Sales of Phones, TVs
Turning South
LG Electronics’ Profits Tumbled by Half in Q2 due to Slow Sales of Phones, TVs
  • By Cho Jin-young
  • July 30, 2015, 01:15
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LG Group is nurturing the auto parts business quickly.
LG Group is nurturing the auto parts business quickly.

 

LG Electronics said on July 29 that it posted 13.92 trillion won (US$11.94 billion) of sales and 244.1 billion won (US$209.4 million) of operating income in the second quarter of this year.

The sales stood at a similar level to that in the previous quarter, which was 13.99 trillion won (US$12.00 billion). But the figure fell 7.6 percent from 15.66 trillion won (US$13.44 billion) in the same period of last year.

Its operating profits during the April-June period were 244 billion won (US$209 million), down 60 percent from a year ago and 20 percent from the previous quarter, respectively, due to the slow sales of its flagship G4 smartphones and televisions. Its net profits in the quarter also tumbled 45 percent year-on-year to 226.4 billion won (US$195.7 million), compared with 411.8 billion won (US$353.3 million) a year earlier.

LG said that its home entertainment business suffered an operating loss of 82.7 billion won (US$71.0 million) due to slow global demand for its TVs. The TV sales reached 3.93 trillion won (US$2.27 billion), down 18 percent from a year earlier.

The mobile communications business, including smartphones, posted 3.6 trillion won (US$3.1 billion) of sales, almost the same as that of a year earlier. Its operating profits dropped 99.7 percent year-on-year to 200 million won (US$171,594).

Shipments of smartphones reached 14.1 million units in the second quarter, down 3 percent from a year earlier, which resulted from increasing competition at home and abroad. Even if its sales of long-term evolution smartphones surpassed the 8 million mark in a single quarter and its sales in the North American market jumped 36 percent year-on-year on the back of robust sales of tablet PCs, LG suffered a 0.3 percentage-point fall to 5.8 percent in the world's smartphone market over the cited period. Its revenue in the South Korean market also lost 29 percent year-on-year.

Its home appliances business was the only winner, generating 291 billion won (US$250 million) of operating profits out of 4.48 trillion won (US$2.84 billion) of quarterly sales. Demand for LG home appliances, such as refrigerators and washers, was solid in North America and India.

Although the company has been making efforts to enter into the vehicle components business, it suffered, however, 1.5 billion won (US$1.2 million) operating losses out of 450 billion won (US$386 million) of sales in the second quarter. The company said the car component business is still in its infantcy, requiring more spending for research and development.