A strong first quarter is being expected by LG Electronics as they have renewed their focus on premium products, which has boosted the profits of both its home appliance and television businesses. On Monday, the South Korean technology firm said that it is expecting to report an operating profit worth $438.5 million or 505 billion won for the quarter that ended in March. This will be approximately 66% higher than the operating profit earned in the same period last year, which was about 305 billion won. Seven analysts had made an estimate and the average indicated that LG would report an operating profit of about 437 billion won. Hence, it is safe to say that the company would surpass expectations if this does happen.
However, despite this increase in operating profit, LG also asserted that it is expecting a quarterly revenue of approximately 13.4 trillion won, which is about 4.5% down from the previous year. This forecast operating profit is going to be the highest that the company has earned in almost two years and it will also be the second straight quarter in which the company will report growth in its operating profit. This shows that that LG Electronics is actually on the right track for making a strong earnings recover in this year.
Nonetheless, the fate of the mobile phone business of the firm is still closely watched because it remains in question. In the past two quarters, the business has been reporting losses, but the global sales of G5, the latest flagship smartphone of the firm went on sale at the end of March. According to analysts, LG is still hoping to make a turnaround in the second quarter for its mobile unit when the sales made of the G5 will be factored in fully. The company has taken the initiative of rolling out an aggressive and passionate marketing campaign for its new flagship smartphone.
This includes holding a launch event for the device at the Mobile World Congress this year in a hall that’s the same size as that of an airplane hangar. The company is also attempting to widen and expand its reach totally by selling the device at outlets of the country’s popular convenience-store chain called GS 25. A developers’ conference has also been held by the company as it is seeking out fresh talent for helping in creating software applications and accessories for its latest smartphone.
Last year, the firm’s profit took quite a beating because its mobile business continued to suffer as opposed to its major rivals, which includes Apple Inc. and Samsung Electronics Co and it also lost some share to low-cost Chinese brands. The mobile business unit of LG was left in the red. Executives of the company have said that they plan to make an investment in major home appliances and high-end televisions in a move to increase sales in these businesses because it relies on them for cushioning the earnings blow that comes from its smartphone unit. A ‘design committee’ has been set up for developing these premium consumer products.
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