LG Posts Mixed Q2 2017 Financials As G6 Sales Falter

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LG Electronics on Thursday published a mixed earnings report for the second quarter of the year that was largely held back by its smartphone unit which continued to struggle during the three-month period ending June 30. After a promising Q1 2017 report, the company posted a significantly weaker operating profit that amounted to $588.2 million, whereas its total revenue reached $12.89 billion. In a wider context, the income figure still marks an increase compared to Q2 2016, having risen by 14 percentage points year-on-year. In accordance with the Seoul-based tech giant’s recent predictions, its mobile unit was in the red for the ninth consecutive quarter, having posted a loss of $117.27 million. The firm attributed that disappointing figure to “weaker than expected premium smartphone sales,” adding that another notable factor which affected its performance is the overall increase in global handset component costs. While the South Korean original equipment manufacturer (OEM) didn’t provide many details on the matter, the company was likely referring to the surging demand for NAND memory chips utilized in contemporary mobile devices.

Even though the LG G6 was expected to increase the firm’s total smartphone sales, LG’s latest Android-powered flagship seemingly lost what little momentum it gained this spring as the Korean phone maker didn’t even disclose its exact sales figures. The consumer electronics manufacturer is now hoping that its newly announced LG Q lineup will drive its mobile sales in the coming months but even if it manages to do so, a handful of mid-range devices that are selling reasonably well can hardly make up for an underperforming flagship seeing how the high-end product category leads to significantly wider profit margins, whereas value-oriented offerings may not be enough to push LG’s mobile division back into the black.

The LG Home Appliance & Air Solution Company was once again the firm’s flagship unit in the second quarter of the year, having been responsible for generating $4.65 billion in revenue and $412.5 million in operating profit during the three-month period and performing well across a wide variety of markets including North America, Europe, and Asia. The Korean OEM believes this business will continue growing in the short term, though it remains to be seen whether its sister divisions will still be holding it back in the coming quarters.