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LG is also looking at a two-year high quarterly profit, up 140% over last year

LG Electronics has posted its preliminary earnings guidance for Q1, 2016, predicting operating profit 140% higher than this time last year.
By
July 8, 2016
LG G5 vs LG V10 quick look-10

There must be something profitable in the water in South Korea right now. Hot on the heels of the news that Samsung is expecting to post its highest quarterly profit in over two years, LG has today announced it is also expecting its strongest quarterly profit in – you guessed it – two years. In fact, LG’s year-on-year profit has grown by an impressive 140%.

LG predicts a solid first quarter: up 66% from a year ago
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But LG’s estimate gets even better than that. In Q1, 2016, LG is forecasting its second-highest quarterly operating profit since entering the smartphone business back in 2010. In Q2, 2016, LG expects 585 billion Won in operating profit, compared to its all-time high of 606 billion in Q2, 2014. As you likely know, LG has a very strong TV and home appliance business and also has strong performance from LG Display and LG Chem to thank.

LG is forecasting its second-highest quarterly operating profit since entering the smartphone business back in 2010.

Unfortunately, LG can’t thank sales of the LG G5 for its good fortune, with an LG executive recently telling me the LG exec reshuffle is “partially related to lower than expect G5 sales”. While Samsung’s recent good fortunes are unlikely to be significantly based on the success of the S7 and S7 Edge either, at least Samsung Mobile is performing better than it has been. LG Mobile, on the other hand, seems to be having “one of those years,” with the modular G5 not exactly taking off.

Greg Roh, an HMC Investment analyst, notes that “despite the G5’s originality, LG sold only 2.2 million units of the strategic model due to stiff competition. We expect the (mobile division) to remain in the red in 3Q16”. While we can’t confirm those sales numbers, they certainly sound about right. The LG V10 has arguably been the better performer. LG’s audited quarterly earnings will be made available later in July but analysts are predicting a fifth consecutive quarterly operating loss for LG Mobile.

Does LG’s solid performance surprise you? Do you think the LG V11 can save the day?

In case you missed it: Flashbacks and Forecasts: LG in 2016