Today LG announced a 46 per cent increase in net profit for the second quarter of 2012 compared to the same period last year. The profits have been attributed to LG’s improved performance in home entertainment and home appliances, which offset a decline in the company’s mobile and air conditioning business.
The company’s operating profit more than doubled to KRW 349 billion (US$302.95 million) compared to the same period last year. In the company’s financial results, LG credited its performance “to a combination of more premium products, strategic focus on developing markets and aggressive cost reductions.”
Although the company’s revenues were 5.2% higher than the first quarter’s, it endured a decline of 10.6% to KRW 12.86 trillion (US$11.16 billion) due to ailing feature phone and IT performance.
By focusing on premium products, LG’s Home Entertainment Company improved its operating profit compared to the same quarter this time last year. Operating profit in the category more than doubled to KRW 216 billion (US$187.5million) while sales declined 5.8 per cent from the same period a year ago to KRW 5.48 trillion (USD 4.76 billion). The company anticipates sales to be driven by its popular Cinema 3D TVs in the second half of 2012.
LG’s Mobile Communications Company struggled in the recent quarter with an operating loss of KRW 57 billion (US$49.48 million) attributed to an increase in marketing expenditure. Revenue declined 28.5% compared to its performance a year ago to KRW 2.32 trillion (US$2.01 billion), blamed on dwindling demand for feature phones. Smartphone shipments have climbed from 36% (Q2, 2011) to 44% of unit sales on the back of LG’s LTE capable smartphones. LG plans to release more LTE smartphones in the second half of 2012 in developed 4G regions in North America, Europe and Asia.
LG’s Home Appliance Company almost tripled its operating profit this quarter to KRW 165 billion (US$143.23 million) owed to a “better product mix and improved cost efficiency.” Revenues also increased year-over-year to KRW 2.88 trillion (US$2.50 billion) due to growth in developing markets.
LG’s Air Conditioning and Energy Solution Company also posted operating profits amounting to KRW 70 billion (US$60.76 million), up 17% compared to the same period a year ago. Revenues were up 21% compared to the previous quarter, but the company failed to beat its performance the same time last year with a decline to KRW1.47 trillion (US$ 1.2 billion) owed to low demand, notably in Korea. The company will now focus on more energy efficient air conditioners and accelerate growth in its commercial air conditioner systems business.