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LG Profits Reach A Two Year High

LG Electronics who have quietly been growing their share of the Australian TV and appliance markets, have said that their second-quarter operating profit will most likely reached a two-year high.

Profits for the quarter are set to hit 585 billion won or US$504 million.

The result would be the highest quarterly profit since the 610 billion won of the second quarter of 2014.

LG Electronics did not offer any additional details ahead of final results scheduled for late July.

Analysts said ahead of the Friday disclosure that the firm likely saw strong profit from its appliances business and had benefited from warm weather in markets such as Australia that had that boosted demand for air conditioners.

They also said the TV division most likely swung to profit as major sporting events such as the 2016 UEFA European Championship soccer tournament often boosted demand for large-sized sets.

Weak display panel prices also likely helped boost margins, they said.

Some analysts were sceptical about LG Electronics’ prospects during the second half of the year, however, as the appliances business enters a seasonally weaker period.

They also said sales of its G5 smartphones have been disappointing and that the mobile division likely reported a fifth consecutive operating loss in April-June.

“Despite the G5’s originality, LG sold only 2.2 million units of the strategic model due to stiff competition,” HMC Investment analyst Greg Roh said in a report on Thursday, estimating the mobile division booked a loss of 94 billion won.

“We expect the (mobile division) to remain in the red in 3Q16,” Roh said.

LG Electronics also on Friday said revenue for the second quarter likely rose 0.5 percent to 14 trillion won, versus 14.4 trillion won tipped in the Thomson Reuters I/B/E/S poll.

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