LG Electronics (LG) today announced very “solid positive net income” in the second-quarter due to improved performance in most of its business units. “Their mobile phone business shipped 12.1 million smartphones between April and June, the highest ever in the company’s history.”
Their overall revenues in the second quarter saw an increase of 10.1 percent year-on-year. This is as a result of strong sales increases in most of their business units. Even thought their second-quarter operating profit and net profit is slightly down compared to the same period last year, it is a significant improvement from the previous quarter.
LG Electronics comprises of LG Home Entertainment Company, LG Mobile Communications Company, LG Home Appliance Company and LG Air Conditioning and Energy Solutions Company.
The Home Entertainment Company had a 6.4 percent increase in revenues from the previous quarter and hardly any change year-on-year. Second quarter operating profit increased from the previous quarter due to increased sales in developing markets and successful new models but profit is down compared to same period last year. This can be attributed to intense competition and slower demand which resulted in a lower average selling price. In anticipation of the continued weak demand globally and increase in competition, LG is “investing in the premium and large-screen TV market with the expansion of Ultra HD TV and OLED TV products in developed markets”.
The LG Mobile Communications Company, on the other hand had a 34.5 percent increase in revenue in the second quarter compared to the same period last year. They also shipped 12.1 million smartphones in the second quarter, a new quarterly sales record for their company. Although operating profit increased year-over-year, this is a decline when compared to the previous quarter. This is due to lower demand from the Korean market, lower average selling price due to stringent competition and increased marketing investments. It is predicted that the L-Series II and F-Series will increase sales and that high-end products such as G Pro and LG G2 will improve the company’s product competitiveness.
The LG Mobile Appliance Company has also recorded their highest quarterly revenues ever. Their sales figure increased by 10.9 percent from the previous year, driven especially by increased sales in the United States and emerging markets like China and Latin America. Although operating profit increased quarter-over-quarter, it is down when compared to last year due to increased R&D investments. In order to grow its home appliance business, t hey plan on producing differentiated products with improved energy efficiency whilst at the same time improving its cost structure.
LG Air Conditioning and Energy Solutions Company reported record-high revenues in the second-quarter. This is an 184 percent increase compared to last year and a 42.5 percent increase from the previous quarter. Operating income also rose when one compares it to last year and the first quarter. Operating profit margin increased to 9.9 percent and this can be attributed to an enhanced product mix and business structure.
Please note that LG Electronics’ unaudited quarterly earnings results are based on IFRS (International Financial Reporting Standards).