LG Q3 2019 profits down 30.45% YoY due to weak smartphone sales


LG Electronics has reported revenues of 15.7 trillion won (US$ 13.15 billion) for the third quarter that ended September 30, 2019, which is up 1.8% compared to the same quarter last year. It posted profits of 781.4 billion won (US$ 654.4 million), up 19.79% YoY, while net profit was down 30.45% YoY to 345.7 billion won. Decrease in profits is primarily due to losses from mobile communications in the quarter, even home appliance, home entertainment and business solutions business units posted strong results.

Mobile Communications sector reported a quarterly revenue of 1.52 trillion won (US$ 1.27 billion), down 5.59% QoQ and down 24.7 % YoY due to shrinking overall smartphone market, decrease in sales of premium and mass-tier LTE products and delays in 5G upgrades in North American market. The Mobile sector posted an operating loss of 161.2 billion won (US$ 135 million), compared to loss of 144.2 billion won a year ago. This is less compared to 313 billion won loss it posted in Q2 2019 due to production efficiencies and cost improvements.

Losses narrowed QoQ as a result of continuous sales of 5G products,
improved cost structure from relocation of production facility and removal
of one-off relocation costs, said LG. It expects severe price competition from new products during peak season and the domestic market demand to weaken from tighter subsidy regulations.

In this quarter it will expand sales from new premium product with the new Dual Screen 2 with enhanced usability. It also expects profitability to improve YoY from continuous cost improvement activities such as production site relocation, however losses will widen QoQ from higher marketing expenses to support launch of new products in Q4 2019, said LG.

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Author: Srivatsan Sridhar

Srivatsan Sridhar is a Mobile Technology Enthusiast who is passionate about Mobile phones and Mobile apps. He uses the phones he reviews as his main phone. You can follow him on Twitter and Instagram