South Korea's LG Electronics posts higher quarterly profit as mobile losses narrow

FILE PHOTO: Visitors walk past the showroom of LG Electronics during the Auto China 2016 show in Beijing, China April 26, 2016. REUTERS/Kim Kyung-Hoon/File Photo/File Photo

SEOUL (Reuters) - South Korea’s LG Electronics Inc said on Thursday third-quarter operating profit jumped 45 percent as its mobile phone division narrowed losses.

A focus on sales of mid-range mobile phones and cost-reduction plans contributed to smaller losses in its mobile division, LG said in a statement.

Operating profit reached 749 billion won ($657.83 million) in the July-September quarter, in line with the company’s guidance.

Quarterly revenue rose 1 percent to 15.4 trillion won, also in line with the company’s estimate.

The new V40 smartphone is expected to “boost sales in the fourth quarter” and help the loss-making mobile business as it seeks to return to profit, LG Electronics said.

Meanwhile, sales of high-end OLED TV products have been a big hit for the home entertainment business after it cut prices to improve their competitiveness.

However, increasing competition in the high-end television set market complicated the company’s earnings outlook, analysts said, adding that profit growth could also be limited due to a saturated smartphone market.

“It’s going to get difficult for LG if it keeps booking losses in its mobile unit, unless it does something extreme such as making a mega-hit product or laying off staff to restructure its business,” said analyst Lee Jong-wook at Samsung Securities.

LG’s share price fell 3.6 percent on Thursday after the results were released, compared with two percent fall in the broader market.

Reporting by Heekyong Yang; editing by Christopher Cushing and Darren Schuettler