LG: We’ll Sharpen Focus On Premium TVs, Improve Cost Competitiveness

Company outlines strategy as home-entertainment segment swings back to black
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Company outlines strategy as home-entertainment segment swings back to black

Global TV demand will remain sluggish in the fourth quarter, and intensifying competition will “continue for awhile,” but LG said it will bolster its home-entertainment profitability by increasing its marketing focus on the premium segment and by improving cost competitiveness.

In its third-quarter financial report, the company cited “solid sales” of Ultra HD and OLED TVs in North America, Latin America and the Commonwealth of Independent States. Home-entertainment profitability swung into the black following two quarters of operating losses because of improvements in product mix and cost structure, the company said.

Overall the company’s consolidated sales fell 4.7 percent from the year-ago quarter to 14 trillion won ($12 billion), operating profit fell 37 percent to 294 billion won ($251.5 million), and net income fell 38.5 percent to $106.8 million.

Here’s the financial breakout by business segment:

Home entertainment: Sales fell 5 percent to 4.29 billion won because of a weak global TV market and unfavorable exchange-rate movements, the company said. Segment operating profit turned back to black with an operating margin of 0.9 percent following a second-quarter negative 2.1 percent margin, first-quarter negative margin of 0.1 percent, and zero margin in the fourth quarter of 2014. Nonetheless, operating margin was lower than the year-ago 3 percent.

Mobile communications: Dollar volume fell 21 percent to 3.38 billion won compared to the year-ago quarter. Smartphone shipments were down 11 percent to 14.9 million compared to the year-ago quarter, but quarter-over-quarter unit sales in North America grew 12 percent because of demand for mass-tier smartphones.

The segment swung to an operating loss with a negative 2.3 percent operating margin following zero margin in the second quarter and positive margins of 2 to 4 percent in the fourth through second quarters.

Home appliances: Sales rose 4 percent to 4.15 billion won from the year-ago quarter, and operating margins rose to 5.9 percent from the year-ago 1.2 percent. Margins during the three intervening quarters ranged from 2.4 percent to 6.5 percent.


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