LG Doubles 2Q profit on Strong Smartphone Sales
SEOUL, South Korea (AP) — LG Electronics Inc. reported a forecast-beating quarterly profit Thursday and gave an upbeat outlook for smartphone profitability as its mobile division ended a streak of losses.
Like other South Korean exporters, LG Electronics said the strength of the country's currency, the won, eroded its oversea profits. Still, the company's profit was better than expected as smartphone sales jumped to a record high and TV sales recovered ahead of the World Cup.
LG executives said solid sales of handset devices will help its mobile division stay profitable during the fall and winter, even as Apple Inc. is expected to unveil a bigger iPhone and Samsung Electronics Co. is likely to release new models.
"Even if we spend more on marketing expenses, profitability is expected to improve," chief financial officer David Jung told investors.
The South Korean consumer electronics company said its net income for the April-June quarter was 411.8 billion won ($400 million), compared with 155.5 billion won a year earlier.
The figure was more than a fourfold increase from the first quarter and also beat expectations. Analysts polled by financial data provider FactSet forecast 300.9 billion won income.
Operating profit rose 27 percent to 606.2 billion won while sales inched up 1 percent to 15.4 trillion won.
LG said its mobile division was profitable for the first time in a year thanks to strong sales of its flagship G3 smartphones and cheaper L-series phones in North America.
It sold a record 14.5 million smartphones during the latest quarter. About one third of those were devices that run on advanced wireless networks known as LTE, which were more profitable for the handset maker.
LG brought forward the global release dates of its new phones as part of efforts to turn around the performance of its smartphone business.
The G3 smartphone was launched in South Korea at the end of May. Four major carriers in the U.S. began selling the Android-based smartphone last week after its rollout in Asia, Europe and Latin America.
Yoo Bu-hyun, head of financial planning at LG's mobile division, said mobile carriers in the U.S. have responded very positively to the G3 and have become more willing to promote LG devices in their stores.
"I see no problem in reaching 10 million sales" of the G3, Yoo told an investor meeting.
LG's mobile division suffered losses during the second half of last year as it boosted marketing costs to burnish its brand and attract consumers from Samsung and Apple. LG expressed confidence Thursday that its smartphone business will remain profitable.
The recovery comes as Samsung Electronics is expected to report poor financial results as the explosive growth of its smartphone sales slows.
LG also expanded its lineup of both cheaper phones and high-end handsets such as the G-Pro smartphone series that features a giant screen.
LG Electronics has tried to differentiate its products from those of Apple and Samsung Electronics, which capture most of the profit in the global smartphone market.
The G3 features a 5.5-inch display screen that packs more pixels per inch than other leading phones. LG also introduced design changes in its mobile devices, such as moving the power and volume buttons to the back of its phones.
On the television front, the world's second-largest TV maker plans to roll out a new model later this year featuring an advanced display called OLED, which provides rich and vivid colors.