LG Electronics reported a lower quarterly profit as its mobile phone division sank to a loss, underlining the challenges for its smartphone business.
The company today reported a 46 percent increase in net profits for the second quarter of 2012 versus the same period a year ago. Stronger performance in home entertainment and home appliances compared to the second quarter last year helped offset profit declines in LG?s mobile business.
Due to a combination of more premium products, focus on developing markets and aggressive cost reductions, LG's second-quarter net profit increased 46 percent year-over-year to KRW 159 billion (USD 138.02 million) while operating profit more than doubled to KRW 349 billion (USD 302.95 million) from the same period last year. Revenues, while 5.2 percent higher than in the first quarter, declined from last year's second quarter by 10.6 percent to KRW 12.86 trillion (USD 11.16 billion) due to declining feature phone sales and weak demand for IT products.
LG Home Entertainment Company posted improved operating profit in the quarter compared to the same period in 2011. Due in large part to an increase in sales of more premium products and improved supply chain management, operating profit more than doubled to 216 billion (USD 187.5 million) year-over-year. Sales declined 5.8 percent from the same period a year ago to KRW 5.48 trillion (USD 4.76 billion) but increased 2.8 percent from the first quarter of 2012. LG says that its CINEMA 3D TVs will continue to drive sales in the second half as it pushes ahead to become the top global seller in the 3D segment.
LG Mobile Communications Company, after a positive first quarter, struggled in the most recent quarter with an operating loss of KRW 57 billion (USD 49.48 million) mainly due to greater marketing expenses related to new model launches in the quarter. Overall revenues declined 28.5 percent year-over-year to KRW 2.32 trillion (USD 2.01 billion) as a result of shrinking feature phone sales but smartphone shipments rose to 44 percent of unit sales, up from 36 percent the previous quarter capitalizing on LG?s strength in LTE phones. The company is planning to introduce new LTE models in the second half in developed 4G regions including North America and parts of Europe and Asia.