Poor mobile sales contributed to LG making 283 billion Korean Won in April to June versus 498 billion Korean Won in the same quarter of last fiscal year
South-Korean electronics giant, LG Electronics said on Thursday that the company’s net profit in the second quarter of the current fiscal year (2018-19) has declined by 43 per cent. The drop has been marked due to the company’s poor mobile sales, which suffered a bigger loss thereby offsetting the profit growth in television sales.
LG’s second-quarter earnings were US$ 253 billion
In April, when LG announced the report of the last quarter of the previous financial year (2017-18), the company had made a profit of US$ 1.03 billion in profit off US$ 14.1 billion in revenue – the highest first three months’ report in the company’s history. Most of the sales came from the OLED-technology based television sets that surpassed the sales of arch-rival and fellow South-Korean electronics giant, Samsung.
In fact, during the month-long FIFA World Cup 2018 event – the most watched sporting event in the world, LG India said that TV sales have doubled as compared to last year.
However, since the beginning of the current fiscal year of 2018-19, sales of LG have drastically dropped due to reducing TV panel prices and poor sales in LCD televisions. We had earlier reported that the company had announced to cut down its investment plans by US$ 2.7 billion to 2020 due to facing US$ 202.2 million operating loss in the second quarter of 2018-19.
Now, the South-Korean giant said that the company had made only 283 billion Korean Won in April to June earnings as compared to 498 billion Korean Won in the previous year, mainly due to decreasing mobile sales.
Financial data provider FactSet said that the earnings were much lower than the market consensus of 446 billion Korean Won.
LG faced a lazy growth in the smartphone market
LG had spent more on marketing to promote the company’s new G7 mobile phone. The sluggish growth in device sales due to losses in LG’s global smartphone market marked the company’s fifth straight quarterly operating loss for its mobile wing.
The South-Korean firm has been betting on vehicle components for new revenue growth and it stated that uncertainty in the global auto and auto components markets are expected to carry forward, citing US trade policies as the reason.
LG’s vehicle components business has posted quarterly losses too and it has faced so for over a year.