LG Expects 66% Higher Operating Profits In Q1, 2016

April 11, 2016 - Written By Kishalaya Kundu

South Korean electronics major, LG Electronics, has announced that it expects its operating profits for Q1, 2016 to be 66% higher on a YoY basis, boosted by a favorable exchange rate and a healthy growth in its consumer electronics business, even as display panel prices kept falling amidst growing competition. The company, however says that it expects its overall revenues during the quarter to fall 4.5% YoY to 13.4 trillion won ($1.17 billion), partly due to lower operating costs. According to an official filing with the South Korean regulators on Monday, LG Electronics said that it expects a profit of 505 billion won ($441 million) in the first three months of this year, which would be a significant improvement over an average estimate of 408 billion won ($356 million) from an earlier Reuters survey of 25 analysts.

The company is slated to announce its first quarter results officially later this month and if the audited results do match up to LG’s claims, the numbers would mean that the past quarter was its best in terms of overall profitability since Q2, 2014. One important thing to note here is that the company’s mobile devices unit is still not expected to turn profitable this quarter, given the massive marketing spend on the recently-launched LG G5. However, analysts are hopeful that the latest premium smartphone from LG Electronics will be a success for the company, which will then add to its bottom-line in the forthcoming quarters.

LG Corporation is one of the three largest and best-known conglomerates headquartered in South Korea, alongside the likes of Samsung and Hyundai. The group has a number of varied business interests ranging from insurance to telecom and chemicals to electronics. However, the most well-known LG Corp. unit outside of South Korea is unquestionably its consumer electronics unit which designs, manufactures and markets devices ranging from televisions to refrigerators and smartphones to microwave ovens. LG’s electronics unit also happens to be one of the most reputable manufacturers of display panels meant for televisions, computer monitors and smartphones. While its smartphone business is yet to reach the same heights as that of its fellow South Korean rival, Samsung Electronics, the company will be hoping that its latest premium handset will be a hot commodity among consumers this year thanks to its unique modular design and high-end hardware.