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LG's Q2 profits lower than expected, struggling mobile division to blame

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By Plamen Dimitrov

Updated: Jul 07, 2017, 7:47 AM

LG Android

The G6 is a successful product, but LG's mobile division needs more to become profitable

LG Electronics has announced its operating profit estimates for the second quarter of 2017. Judging by the reported preliminary April-June profit of 664 billion won ($574.49 million), it is estimated that the tech giant will record a year-over-year increase of about 14%.

While this growth is by no means meager, the financial results actually fall beneath the expectations of several market analysts, who forecasted that the South Korean company would post a net income of about 755 billion won or $654 million.

Moreover, it appears that the main reason for LG's stunted profits is the firm's mobile division. Dongbu Securities analyst S.R. Kwon has commented on the situation:

It's likely that the mobile division's losses were well over 100 billion won ($86.62 million), while profitability for both the television and appliances businesses were a bit weaker than what we had anticipated.

If this information is accurate, this would mean that LG's mobile business is operating at a loss for the 9th straight quarter, which could be attributed to the increased marketing spending for its latest flagship, the LG G6, as well as subdued sales figures for its other smartphone models.

Still, this doesn't mean that the G6 isn't a successful product for LG's mobile division, especially when compared to last year's modular G5. However, it looks like the company needs to find a way to spread this popularity to some of its other models in order to become self-sustainable.

Meanwhile, LG's "local" rival Samsung could very well record its most profitable quarter ever, with some speculating that Sammie might even earn more than Apple in Q2 2017.

via Reuters

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