Sales of Strategic Models Lackluster
LG Electronics' smartphone business suffered a loss of 146.3 billion won (US$128.5 million) in the third quarter of this year, extending its operating loss streak to 14 consecutive quarters.
LG Electronics announced on Oct. 25 that it recorded 15.427 trillion won (US$13.55 billion) in sales and 748.8 billion won (US$657.9 million).in operating profit in the third quarter, up 1.3% and 45.1% year on year, respectively. Compared to the second quarter, sales increased by 2.7%, while operating profit fell by 2.9%.
Although the home appliances (H&A) and TV (HE) sectors had solid performance, the MC Division that is in charge of the smartphone business made a loss.
The MC Division has been in deficit for six consecutive quarters until third quarter and the loss streak is extended to 14 consecutive quarters if the first quarter of 2017 is included. The company merged the Companion Device Division with the MC Division at the time, improving the latter’s bottom line.
The MC Division’s sales in the third quarter were 2.41 trillion won, down from the same period of last year (2.87 trillion won) and the previous quarter (2.072 trillion won). Its accumulated sales until the third quarter of this year reached 6.3 trillion won, raising the possibility of its annual sales falling short of 10 trillion won for the first time since 2012.
What's positive is that operating losses shrank compared with 185 billion won in the previous quarter and 381 billion won in the same period last year.
The company said its performance has been improving as positive assessment continues for LG smartphones such as the G7, a strategic model for the first half of the year, and sales of low-priced models such as the Q7 and Q8 remain robust.