LG Electronics Q2 operating profit jumps on narrowed handset losses

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SEOUL, July 27 (Yonhap) -- LG Electronics Inc. on Wednesday reported a 25 percent surge in its second-quarter operating profit on narrowed losses from its handset business but offered a grim outlook for the current quarter, citing its slumping home appliance business.
Operating profit reached 158.2 billion won (US$150.9 million) in the April-June period, compared with an operating profit of 126.2 billion won a year earlier, the world's No. 3 mobile phone maker said in a regulatory filing.
The figure was in line with the market consensus of 158.4 billion won, according to analysts polled by Yonhap Infomax, the financial news arm of Yonhap News Agency.
Sales, however, inched down 0.2 percent on-year to 14.4 trillion won in the three-month period, and net profit plunged 87 percent to 108.4 billion won on losses from investments in electronics component-making affiliates.
Shares of LG Electronics closed at 83,800 won on the Seoul bourse, up 2.57 percent from the previous session's close.
Operating profit rose from the previous year thanks to LG's new smartphone models, which helped narrow the loss in the mobile communications business, LG said.
The operating loss from the mobile division, one of LG's four business pillars, reached 54 billion won, about half of last year's losses of 119.6 billion won.
After posting the dismal losses, the company reorganized its resources to focus on high-end handsets to play catch-up with Apple Inc. and Samsung Electronics Co.
It rolled out the Optimus series of smartphones this year, including the latest Optimus 3D, which has a 3-D display screen for playing games and watching movies.
The company's chief financial officer said LG's mobile business is expected to see "an improvement in profitability" in the October-December quarter as it increases its portion of smartphones.
Another company official added that LG will roll out a new high-end smartphone as early as the end of September but declined to disclose more details.
LG, which is the world's second-largest TV supplier, posted a slightly higher profit from TV sales as its portion of premium TVs, such as 3-D TVs, increased.
A rise in raw material costs, however, trimmed profits in the home appliance sector, it added.
Profitability will worsen in the current quarter from the second period, the chief financial officer said, due largely to home appliances and air conditioners, coupled by the decreasing sales of rudimentary cell phones for mass markets.
"A global economic slowdown persists, and uncertainties in foreign currency exchange rates and raw material costs are expected to continue," said Jung Do-hyun.
"As home appliance and air conditioner businesses enter a seasonally low quarter and regular handset sales decline, third-quarter sales and profitability are forecast to be lower than the second quarter."
ylee@yna.co.kr