LG Elec Q2 profit dips; eyes on August smartphone launch

Tuesday, 30 July 2013 00:00 - - {{hitsCtrl.values.hits}}

Q2 operating profit 479 b won vs. 457 b won forecast
TV profits fall to 106.5 b won from 304 b won year ago
Smartphone shipments at record 12.1 m, margin squeezed on marketing
Air conditioning profit almost doubles from a year ago

SEOUL (Reuters): LG Electronics Inc., the world’s number two TV maker, reported a 9% fall in quarterly profit, beating expectations as record sales of air conditioners and a recovery in smartphones offset tighter margins and sluggish TV sales. The air conditioning business made the strongest earnings contribution with a 171 billion won ($ 153.1 million) profit, almost double a year ago, thanks to solid sales of high-end units and new products. Smartphone sales more than doubled from a year ago and increased 17% from the previous record of 10.3 million in the first quarter, helping the business swing to a profit of 61 billion won from a 30 billion won loss a year ago. LG’s making smartphone business rebounded to become the world’s third biggest late last year, and the company is now hoping its flagship G2 model, due out early next month, will help narrow a gap with market leaders Samsung Electronics Co Ltd and Apple Inc. The South Korean firm, which sold a record 12.1 million smartphones in the second quarter, has said the new G2 model will include a full high-definition screen and connection speeds up to twice faster than conventional 4G networks. April-June operating profit fell to 479 billion won, above a consensus forecast for 457 billion won by Thomson Reuters I/B/E/S. The profit compares with 526.7 billion won a year ago and 349.5 billion won in the previous quarter. Profit margin eased to 2.0% from the previous quarter’s 4.1% as the company increased marketing spend following Samsung’s launch of its Galaxy S4 phone in April. The recovery at LG’s TV business remained slow as weak sales of premium models – such as super-thin organic light emitting diode (OLED) sets with a $ 15,000 price tag – added to sluggish shipment growth in a slow economy. TV division profit fell by two thirds to 106.5 billion won from 306 billion won a year ago, although it recovered from a 28.5 billion won profit in the previous quarter. The company expected weak TV demand would continue in the current quarter, while competition will get tougher. Shares of LG Electronics rose 1.8% after the results, compared to a 0.2% gain for the broader market.

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