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LG Reports Jump in Profit as Strong TV Sales Offset Mobile Losses

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LG Reports Jump in Profit as Strong TV Sales Offset Mobile Losses

Highlights

  • LG's third-quarter operating profit rose 82 percent from a year earlier
  • July-September profit for LG climbed to KRW 516 billion on a 15.1% rise
  • However, LG's mobile division reported a KRW 375 billion loss

South Korea's LG Electronics Inc said on Thursday its third-quarter operating profit rose 82 percent from a year earlier, as healthy sales for its appliances and televisions offset another loss for the mobile division.

July-September profit for the world's second-largest TV maker climbed to KRW 516 billion ($459 million or roughly Rs. 2,977 crores) on a 15.1 percent rise in revenue, in line with guidance given by the company earlier this month.

The jump in profits reflected "strong profitability in home entertainment and appliances despite the gloomy business environment resulting from increasing international trade concerns," LG said in a statement.

The firm forecast fourth-quarter earnings would fall quarter-on-quarter but continue to show stable profitability.

Operating profit for the appliances division jumped 26 percent from a year earlier to KRW 425 billion, thanks to sales of high-margin products such as its premium-label refrigerators and washers.

Sales of high-end televisions, including those with organic light-emitting diode (OLED) screens, helped earnings at its TV division rise 20 percent to a quarterly record of KRW 458 billion, with operating margin of 9.9 percent.

But the firm's mobile division reported a KRW 375 billion loss, its tenth consecutive quarterly loss. It was hit by declines in sales of its flagship G6 phones released in the first half of the year, and higher spending on marketing as rivals launched new products.

LG released its latest premium V30 model toward the end of the quarter so most of those sales have yet to be reflected in earnings.

The electronics giant may face restrictions on exports from its Thailand and Vietnam plants to the United States going forward, following a ruling this month by the US International Trade Commission that surging imports of large residential washing machines harmed domestic producers.

Seoul-based analysts, however, said the impact could be limited, as the commission's ruling excluded washing machines made in South Korea, which are already subject to duties, and LG is set to open a new factory in Tennessee in late 2018.

© Thomson Reuters 2017

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