LG's home appliance business posted record profits in Q2 2019, offsetting smartphone losses.
What you need to know
- LG Electronics saw consolidated sales rise to $13.4 billion during Q2 2019, but operating income was down 15.4%.
- LG's smartphone sales during Q2 2019 were 21.3% lower compared to last year.
- The company has blamed the lower sales on stagnant demand in the smartphone market and aggressive pricing by Chinese smartphone makers.
On July 30, LG announced its financial results for the second quarter of 2019. The company registered record sales during the April-June period this year, with consolidated sales going up by 4.1% to $13.4 billion. Operating income, on the other hand, was down 15.4% compared to the same period last year. While the company as a whole did quite well in the second quarter, LG's smartphone business continued to struggle.
The company's mobile communications division record sales of $1.38 billion during the period, which is 21.3% lower compared to last year. LG says the sales dropped due to the stagnant demand in the smartphone market and the continued aggressive pricing by Chinese smartphone makers.
When compared to Q1 2019, however, sales increased by 6.8%. Despite that, the business reported an operating loss of $268.4 million, mainly due to higher marketing investment for new models and costs related to relocation of smartphone production to Vietnam.
Even though things don't appear very optimistic right now for LG's smartphone division, the company is hopeful that things will get better in the third quarter. The company believes the introduction of new mass-tier smartphones, such as the new W-series for the Indian market, will result in improved performance next quarter.
Additionally, LG is hoping that the growing demand for 5G products will also contribute to higher sales in Q3 2019. LG currently offers only one 5G-enabled smartphone, the V50 ThinQ 5G. It went on sale in the U.S. last month and happens to be slightly more affordable compared to most other 5G smartphones that are currently on sale.
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