LG Electronics said its strong operating profit margin in its Home Appliance & Air Solution Company contributed to a modest overall net profit of KRW 124.8 billion ($106.76 million) for the third quarter of 2015.
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Amid increasing competitive pressure in both the TV and smartphone sectors, LG’s third-quarter sales rose 0.7 percent from the second quarter to KRW 14.03 trillion ($12 billion), while operating profit increased from the previous quarter to KRW 294 billion ($251.5 million).
The LG Home Entertainment Company reported third-quarter revenue of KRW 4.29 trillion ($3.67 billion), an increase of 9 percent quarter-on-quarter due to solid sales in UHD and OLED TVs in markets such as North America, Latin America and Commonwealth of Independent States.
Profitability also increased from the previous quarter as a result of improvements in product mix and cost structure. With continuing soft global TV demand, LG plans to bolster its profitability by increasing its marketing focus in the premium segment while continuing to improve its cost competitiveness.
The LG Mobile Communications Company reported global shipments of 14.9 million smartphones, a 6 percent increase from the previous quarter. Despite a 12 percent sales increase in North America, overall revenues of KRW 3.38 trillion ($2.89 billion) were 7 percent lower quarter-on-quarter and decreased 21 percent year-on-year due in large part to weaker demand for high-end devices in Korea.
LG expects the launch of the advanced V10 and price-competitive Nexus 5X smartphones in the fourth quarter to improve the overall product mix.
The LG Home Appliance & Air Solution Company reported a strong quarter with a 4 percent increase in sales to KRW 4.15 trillion ($3.55 billion) and an operating profit of KRW 245.6 billion ($210.1 million), an increase of 420 percent from the same period the year before.
Operating profit for refrigerators improved as a result of strong sales of premium models in North America and Korea while the unique new Twin Wash system contributed toward improved profit margins in the washing machine business. Fourth-quarter results are likely to be impacted by the effects of unfavorable exchange rate and seasonality.
The LG Vehicle Components Company reported a 6 percent increase in sales quarter-on-quarter to KRW 478.6 billion ($409.41 million) primarily as a result of its growing infotainment business.
Revenues from vehicle engineering were flat due to weaker demand in emerging markets such as Russia and Malaysia. Investments in R&D related to electric car and automotive electronic components contributed to a modest operating loss. Going forward, LG expects recent issues related to diesel automobiles to positively affect the electric vehicle and automotive electronic components markets. ■