Poor Performance Continued
LG Electronics posted an operating loss in the Mobile Communications (MC) business division, which is in charge of smartphone business, for 10 straight quarters.
The company announced its Q3 financial results on October 26. For a second consecutive quarter, the mobile business division posted an operating loss, this time 375.3 billion won (US$333.45 million). Its sales stood at 2.81 trillion won (US$2.49 billion), up 8 percent from the previous year.
Taking a look at the Q3 2017 performance forecasts from 10 securities companies, including Mirae Asset Daewoo Securities, the average estimated operating loss of LG Electronics’ MC division was 292.8 billion won (US$260.15 million). The actual losses got bigger than market expectations. This was due to increased costs from the rise in unit costs of major components like memory chips and one-time royalties.
Its sales rose four percent compared to the previous quarter and eight percent compared to a year earlier as the sales of the G6 flagship were stably maintained and the sales of some mid-tier devices like the LG Q6 and the LG K-series expanded.
The sales of smartphones reached 13.7 million units over the same period, up three percent from the previous quarter and 1 percent from a year ago. In particular, the sales of smartphones increased nine percent in the main North American market and 44 percent in South Korea compared to the previous quarter, while that of mid-tier smartphones grew six percent.
Entering the market peak season, LG Electronics expects that the competition in new premium models with its competitors will become more intense in the fourth quarter as well as in market share owing to price competition and growing promotion costs.