Mobile sales bode well for LG Electronics in Q3

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Mobile sales bode well for LG Electronics in Q3

Korean consumer electronics giant LG Electronics is expected to swing to an operating profit in the third quarter on the back of its improving handset business, analysts said yesterday.

The tech giant is likely to reap an operating profit of 223.6 billion won ($202.1 million) in the July-September period, turning around from a 31.9 billion won loss a year earlier, according to an estimate of local securities firms compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency.

LG is scheduled to report its third-quarter earnings tomorrow.

The upbeat profit outlook was largely attributed to an improvement in the company’s money-losing mobile business. LG, a latecomer to the smartphone sector compared with Samsung Electronics and Apple, has been struggling to regain its mobile foothold.

In the second quarter, LG Electronics ranked as the world’s fifth-largest handset maker with a market share of 3.4 percent, according to the data by market researcher Gartner, slipping two notches from a year earlier due to its lackluster handset sales and growing competition from low-cost manufacturers. While analysts provided varying operating profit estimates for the company’s mobile communications division, which includes handset sales, they mostly projected the company would post a minor loss or profit compared with a massive 138.8 billion won loss the previous year.

“The on-year improvement comes mostly on the back of the company’s recovering mobile business,” said Lim Do-ri, an analyst at Shinyoung Securities. “The company’s mobile business is still a far cry from that of Samsung Electronics, but it is definitely making improvements and is likely to continue to do so in the fourth quarter,” said Lim, projecting the company’s estimated 6.6 million smartphone sales in the third quarter would rise to 8.2 million units in the October-December period. Others shared similar sentiments, adding that a favorable currency rate also helped lift the company’s handset business.

“A turnaround appears to be underway as smartphone shipments should top guidance [7 million units] and as the Korean won-euro exchange rate was favorable in September,” Korea Investment & Securities analyst Kevin Lee noted in an Oct. 17 report.

Lee pinned hopes on LG’s flagship Optimus G phone, which was released late last month, expecting the device to easily sell 1 million units in the fourth quarter and bring the portion of smartphone sales to above 50 percent for the first time.


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