Unexpected Performance
LG Electronics announced Q2 earnings, greatly surpassing market expectations. The smartphone business unit, which had recorded losses for three consecutive quarters, showed excellent performance to boost the overall figures.
The company announced on July 24 that it recorded 15.3746 trillion won (US$14.9698 billion) in consolidated sales, along with 606.2 billion won (US$590.7 million) in operating profits in the second quarter. The most recent market consensus was 15.525 trillion won (US$15.129 billion) and 529 billion won (US$515 million) each. The operating profits reached a new five-year high since the third quarter of 2009, when the amount had been 850 billion won (US$827 million).
The hero is the Mobile Communications (MC) Division, which had posted a loss of 79.7 billion won (US$77.6 million) in Q3, 2013, but turned over a surplus for the first time in three quarters. The division’s operating profits amounted to 85.9 billion won (US$83.6 million) at this time, and the quarterly smartphone sales volume of LG Electronics broke the 14 million unit mark without precedents.
The other divisions bolstered the company’s quarterly performance, too. For instance, the Home Entertainment (HE) Division’s sales increased 3 percent from the previous quarter to 5.09 trillion won (US$4.96 billion) thanks to the popularity of its new TV products. Still, the business profits fell to 154.5 billion won (US$150.4 million) due to an increase in marketing costs.
The Home Appliances (HA) Division posted 3.0305 trillion won (US$2.95 billion) and 97.8 billion won (US$95.2 million), respectively. The former increased by 11 percent quarter-on-quarter, led mainly by its refrigerators equipped with an ice dispenser-cum-water purifier, washing machines and the like. The Air Conditioning and Energy Solution (AE) Division recorded 1.635 trillion won (US$1.591 billion) and 164.2 billion won (US$159.9 million). Sales went up by 34 percent from the preceding quarter for its commercial air conditions and Whisen air conditioners and dehumidifiers, but dropped by 6 percent when compared to a year earlier.
LG Electronics’ cumulative operating profits totaled 1.1102 trillion won (US$1.0819 billion) in the first half of 2014. The amount is 34 percent higher than that of the previous year. The company had posted 1.2847 trillion won (US$1.2519 billion) in cumulative operating profits in 2013.