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LG mobile division posts $126 million loss for Q1 2018, lays blame on new strategy

LG is pinning its hopes for a mobile revival on the G7 ThinQ flagship and its software upgrade center scheme.

Published onApril 26, 2018

  • The Korean company posted an overall operating profit of roughly $1 billion for Q1 2018, but the mobile unit saw an operating loss of $126.8 million.
  • LG is predicting better results in Q2, when the G7 ThinQ flagship launches.
  • The new smartphone will need to do phenomenally well to buck the trend of mobile unit losses.

If you’ve been following LG’s financials over the past year or so, you may have noticed a trend where the wider company rakes in huge profits while the mobile division posts consecutive losses. Unfortunately for LG, that pattern has continued into 2018.

The company’s Q1 2018 results show that LG Electronics posted an operating profit of 1.1 trillion won ($1 billion) for Q1 2018, compared to 921.5 billion won during Q1 2017. That’s a significant year-on-year improvement, and a big step above Q1 2016’s operating profit of 505.2 billion won ($468 million by today’s exchange rate).

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The firm reported a 20 percent increase in operating income, making for the “highest first-quarter profit and revenue in company history.” The performance also translates to the “highest quarterly profitability” since Q2 2009, LG added.

It’s a different tale for the LG mobile division, however, as the unit posted sales of 2.16 trillion won ($2 billion) and an operating loss of 136.1 billion won ($126.85 million) for the quarter. By comparison, Q1 2017 saw the unit deliver an operating loss of 200 million won ($185,000 by today’s conversion rate).

“Sales declined from the same quarter last year due to a revised smartphone launch strategy,” the company explained.

LG is forecasting improved sales in the second quarter of the year, citing the upcoming LG G7 ThinQ flagship and its software upgrade center as two major drivers

That strategy was first revealed back at CES 2018, when LG Electronics CEO Cho Sung-jin said the company would release new phones “when it is needed.” The executive said it would also reveal more variants of the G and V series flagship phones. We saw the first major variant at MWC 2018 in the form of the V30s ThinQ, packing more RAM/storage, as well as improved AI-related camera features compared to the V30.

The company is forecasting improved sales in the second quarter of the year, citing the upcoming LG G7 ThinQ flagship and its software upgrade center as two major drivers. The new flagship will be officially revealed on May 2, but we already know it’ll pack a notch, a super bright LCD screen, and a dedicated AI button. Other reported specs include a Snapdragon 845 chipset and dual 16MP cameras.

The G7 will need to be a cut above previous releases if it hopes to turn the LG mobile unit around, however. The company’s Q2 2017 earnings saw a 132.4 billion won ($117.2 million) loss, owing to “weaker than expected” sales of the G6 and other high-end handsets.