LG narrows mobile losses on cost cutting - Mobile World Live

LG narrows mobile losses on cost cutting

26 OCT 2018

LG Electronics reported a sharp decline in its mobile device business revenue in Q3, but reduced the unit’s operating loss by more than half from the same period in 2017 on cost-savings measures.

Revenue at its Mobile Communications division fell 24 per cent year-on-year to KRW2.04 trillion ($1.79 billion), representing 13.2 per cent of total revenue in the quarter compared with 17.6 per cent in Q3 2017. The business unit recorded an operating loss of KRW146 billion down from a KRW381 loss in Q3 2017.

The South Korea-based vendor blamed weak global smartphone demand and intensifying competition, but noted its mid-tier range made gains sequentially. It also noted profitability improved due to better material and overhead cost efficiency.

When the accessories business is not included, LG has lost money from its smartphone unit for 14 consecutive quarters.

Outlook
Looking ahead to Q4 the company said competition in the premium smartphone market is expected to intensify as the market enters the peak season, and price competition and promotion costs will increase accordingly.

It aims to expand sales and improve profitability with new competitive models including V40 ThinQ and other products at reasonable prices.

On a group level, consolidated sales rose 1.3 per cent year-on-year to KRW15.4 trillion, with steady gains in its Home Appliance business and a 41 per cent increase in Vehicle Component sales offsetting weakness in both its Mobile Communications and Home Entertainment units (the latter’s revenue fell from KRW4.64 trillion in Q3 2017 to KRW3.71 trillion).

The company’s net profit increased 47.9 per cent year-on-year to KRW497 billion.

Its earnings outlook warned of continued business risk caused by rising US protectionism and slowing demand from emerging markets.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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