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LG misses profit expectations due to money-losing mobile division

LG didn't generate as much profit and revenue in Q2 as some have expected, mainly because of the loss posted by its mobile business.

Published onJuly 7, 2017

LG has revealed its Q2 earnings guidance, and the news is both good and bad at the same time. The good news is the company’s operating profit and revenue for the quarter increased by 14 and 3.9 percent when compared to the same period a year ago. LG generated 664 billion won ($574.49 million) in profit, while revenue stood at 14.6 trillion won ($12.6 billion).

The bad news is that the financial results are actually below expectations. Some market analysts expected that the company would post a profit of 755 billion won ($654 million) and 15.1 trillion won ($13.1 billion) in revenue.

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LG didn’t go into specifics regarding its forecast, but analysts did say that the company’s mobile business saw an operating loss for the ninth straight quarter. This is reportedly because of subdued sales as well as high marketing costs for the G6, which was announced back in February at MWC. S.R. Kwon, an analyst at Dongbu Securities, said that it’s likely that the loss of the mobile division in the second quarter was well over 100 billion won ($86.5 million).

The LG G6 is a great device and has been selling quite well based on some of the reports we have heard since it launched. It’s definitely a lot more popular on the market than its predecessor, the G5. However, it looks like it’s still not bringing enough money into LG’s pocket to make its mobile division profitable. Of course, we can’t blame the bad financial results on just one device. LG has a number of smartphones on offer, which apparently just aren’t as popular among consumers as the company would like.

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