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(2nd LD) LG Electronics' operating profit up 16.1 pct in Q2

All Headlines 16:05 July 06, 2018

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By Kang Yoon-seung

SEOUL, July 6 (Yonhap) -- LG Electronics Inc. said Friday its second-quarter operating profit advanced 16.1 percent from a year earlier, apparently led by stable sales of TVs and home appliances.

Operating profit came to 771 billion won (US$691 million) in the April-June period, compared to 664 billion won posted in the same period a year earlier, LG Electronics said in its earnings guidance report.

Sales rose 3.2 percent over the cited period to reach 15 trillion won.

The operating profit fell shy of the market's estimate of 8.4 trillion won suggested by 17 brokerage houses, compiled by Yonhap Infomax, the financial arm of Yonhap News Agency.

A model demonstrates the LG G7 ThinQ camera in this photo released by the company on June 10, 2018. (Yonhap)

LG did not offer performance and net profit estimate reports for each business division. The company will deliver its finalized earnings report later this month.

Operating profit slid 30.4 percent from January-March of 2018.

Industry watchers said the on-quarter decline apparently came on increased marketing expenditures, along with sluggish sales of smartphones.

LG, however, said it was the first time for the company to post sales above 30 trillion won over a January-June period.

In the first six months of 2018, LG raked in 30.1 trillion won in sales, along with a record 1.87 trillion won in operating profits.

Analysts said the strong sales of home appliances and TVs were apparently the driving force behind the record-breaking earnings for the first half of the year.

The home entertainment business posted an operating profit-to-sales ratio of 14 percent in the first quarter, and the company is expected to have maintained a 10-percent level for the April-June period.

Rising seasonal demand is also estimated to have contributed to the performance of the home appliances division, they added.

The mobile communications business, which oversees smartphones, however, is expected to have continued posting losses. If the division remained in negative territory for the three month period, it would virtually mark the 13th consecutive quarter for LG losing money in this business area.

The company did manage to report a slight operating profit in the first quarter of 2017, but the gain was made possible through a later adjustment.

The company is assumed to have increased expenditures to promote the LG G7 ThinQ smartphone, but the sales have not met expectations despite various efforts, including employing popular K-pop boy band BTS for promotions, analysts said.

LG Electronics, meanwhile, is expected to maintain stable earnings for the rest of 2018 on the back of sales of premium TVs sized 65 inches and larger. Improved sales of washers and refrigerators are also expected to bolster the rosy outlook, analysts said.

Shares of LG Electronics closed 2.7 percent lower from the previous session at 75,700 won on Friday. The second-quarter estimate was announced during the market session.

K-pop boyband BTS members are shown in this promotional poster released by LG Electronics Inc. on June 25, 2018. (Yonhap)

colin@yna.co.kr
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