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(2nd LD) LG Electronics operating profit up 44.4 pct in Q3

All Headlines 16:21 October 05, 2018

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By Kang Yoon-seung

SEOUL, Oct. 5 (Yonhap) -- LG Electronics Inc. said Friday its third-quarter operating profit moved up 44.4 percent on-year, apparently on the back of the strong returns from its TV and home appliances businesses.

Its operating profit came to 745.5 billion won (US$659 million) in the July-September period, compared to 516.1 billion won posted a year earlier, the company said in a regulatory filing.

Sales edged up 1.3 percent over the cited period to reach 15.4 trillion won.

The third-quarter guidance report's operating profit hovered below the market's estimate of 771.7 billion won, based on a survey conducted by Yonhap Infomax on 15 securities firms. The estimate on sales came to 15.8 trillion won.

With its third-quarter operating profit exceeding 700 billion won, however, LG Electronics will likely post an annual profit of 3 trillion won for the first time in 2018.

Despite the on-year increase, the latest operating profit represented a 3.3 percent drop from the previous three-month period. Industry watchers said the on-quarter decrease was apparently attributable to sluggish demand for its smartphones.

The company did not provide detailed performance data for each division. The finalized earnings will be delivered later this month.

Industry watchers claim the TV and home appliances divisions were largely responsible for the on-year increase in profits.

The smartphone business, however, is expected to have posted yet another quarterly shortfall for the July-September period. The division has been posting losses since the second quarter of 2017.

The company is estimated to have lost up to 160 billion won from the mobile business in the July-September period, although this is a slight improvement from the 381 billion won loss posted in the same period in 2017.

Counting the operating profit posted in the first quarter of 2017 through a last-minute adjustment as another loss, LG Electronics has been effectively losing money from smartphones for 14 consecutive quarters.

LG posted an operating profit of 3.7 billion won in its smarpthone business in the January-March period by including its accessories business.

While LG is seeking to revitalize the smarpthone business through the new flagship V40 ThinQ, which comes with a whopping five cameras, industry watchers said the smartphone still fails to provide distinctive features compared to those of Samsung Electronics Co. and Apple Inc.

The company also plans to expand its portfolio of budget models to increase sales.

Industry watchers added LG Electronics may post better earnings in upcoming quarters, when the mobile division reduces losses by cutting expenditure on marketing projects.

The vehicle components business may also start to generate full-fledged profit next year in cooperation with Austrian automotive lighting system firm ZKW Group, which was recently purchased by LG.

Shares of LG Electronics closed 2.17 percent higher at 70,500 won. The guidance report was announced during market hours on Friday.

Models pose with LG Electronics Inc.'s V40 smartphone in this photo taken Oct. 4, 2018 in Seoul. (Yonhap)

colin@yna.co.kr
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