UPDATE 1-LG Elec Q2 profit tumbles as handset unit slips
* Operating profit tumbles to 126 bln won vs 210 bln fcast
* Handset business swings to 120 bln operating loss
* Shares down 0.5 pct vs 0.15 pct rise in KOSPI
SEOUL, July 28 (Reuters) - LG Electronics Inc (066570.KS), the world's No.2 TV maker, reported a worse-than-expected 90 percent fall in second-quarter profit, hit by poor TV and mobile handset sales.
A weak smartphone lineup is seen continuing to depress earnings recovery in the second half amid hightening competition from the likes of Apple (AAPL.O) and Samsung Electronics (005930.KS).
"Earnings performance will continue to be dull through the third quarter but some improvements are seen in the fourth quarter, helped by the debut of its new Android-based smartphone," said Nam Dae-jong, an analyst at SK Securities.
A fragile global economy and growing uncertainty over euro zone debt crisis could also dampen demand for flat-screen TVs and other home appliances such as washing machines and fridges.
The South Korean firm reported 126 billion won ($106.6 million) in April-June operating profit, versus 1.24 trillion won a year ago and a consensus forecast of 210 billion won by 12 analysts polled by Thomson Reuters.
Its TV division also took a hit, as a nearly 10 percent fall in the euro EUR= against the U.S. dollar last quarter inflated dollar-based settlement costs for flat screens and other production materials. LG is estimated to earn around 40 percent of its TV sales in Europe.
Its mobile phone business remains LG's weakest area and the company is planning to double product rollouts in the second half under the rebranded 'Optimus' to turn it around.
Much depends on how successfully it launches its Google (GOOG.O) Android-based smartphone, which will go on sale this quarter globally through 120 carriers.
LG, which has failed to introduce a hit model to compete against Apple's iPhone or Android phones made by Samsung and HTC (2498.TW), said its handset business unit swung to a quarterly operating loss of 120 billion won.
It said mobile phone shipments would rise by a low single digit percent in the current quarter.
The company sold 30.6 million mobile phones in the second quarter, versus 27.1 million shipments in the first quarter.
Shares in LG, which trails Nokia (NOK1V.HE) and Samsung in mobile phones and competes with Sony Corp (6758.T) and Panasonic Corp (6752.T) in flat-screen TVs, fell 0.5 percent by 0415 GMT versus a 0.15 percent rise in the KOSPI .KS11.
The stock dropped 15 percent so far this year, lagging a 5 percent gain in the wider market.
(Reporting by Miyoung Kim and Jungyoun Park; Editing by Jonathan Hopfner)
- Tweet this
- Share this
- Digg this