Reporter PK

LG losses increases in Quarter-2 of US $ 101 Million

LG losses increases in Quarter-2 of US $ 101 Million

The recession affect continued on the cellular vendors as the LG Electronics – the world’s third-largest device vendor – has reported a second-quarter KRW120 billion (US$101 million) loss at its handset unit, and a KRW133 billion loss at its overall mobile communications division.

According to the official results declared by the LG Electronics the three month operating loss was LG’s worst quarterly loss from the handset unit in eight years and was a reversal from an operating profit of KRW620.2 billion a year earlier. Revenue from handset sales was down 30.8 percent year-on-year, to KRW3.373 trillion, whilst total mobile sales fell 29.5 percent to KRW3.619 trillion. The fall in sales, and the huge operating loss, came despite a 2 percent year-on-year increase in handset shipments to 30.6 million units in the quarter. The South Korean vendor blamed the handset division’s loss on “investment in R&D and expansion of channels in emerging markets for future development,” as well as the need to cut prices to boost sales.

(KRW B) 2Q10 2Q09 YoY Growth
Mobile Revenue 3.619 5.136 -29.5%
Mobile Operating Income -133 633 — 
Handset Shipments (M) 30.6 30.0 2%

 Analysts blamed LG’s poor showing on its slow development in the smartphone space and, although analysts expect results to pick up from the third quarter onwards, they note that LG’s handset business may not record a turnaround until the fourth quarter when the company is expected to rollout new smartphones running Google’s Android platform. LG said handsets based on Android will account for more than half of its smartphone models this year. It is particularly targeting growth in the North American and Korean markets. The disappointing mobile results led to a 33 percent year-on-year fall in second quarter net profit for LG Electronics as a whole (KRW856.4 billion). Sales fell 0.7 percent to KRW14.41 trillion.

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