LG has record high Q3 earnings thanks to smartphones

Smarphones made LG Electronics happy again in the third quarter of this year (from July through Sept.) following the second quarter (from April through June).

LG Electronics said on Wednesday, “The Mobile Communication business group, which is in charge of a smartphone business, set a record high quarterly earnings since the third quarter of 2009, with the revenue of 4.24 trillion won (4.05 billion US dollars ) and the operating income of 167.4 billion won (159.7 million dollars) in the third quarter this year.” The revenue jumped 17.3 percent and the operating income rose 94.8 percent compared with the second quarter.

LG Electronics’ total revenue was 14.9 trillion won (14.24 billion dollars) and operating income was 461.3 billion won (440.3 million dollars). Although the operating profit declined 23.9 percent from the second quarter, it increased 111.8 percent from the third quarter of last year. After the earnings announcement, the company’s stock price soared 4.31 percent from Tuesday to close at 67,800 won (64.7 dollars).

The electronics and securities industry see that the improved performance of LG’s mobile communication business group, which used to have less presence in the market than televisions and home appliances, is back on the right track. It is the first time that the group had the largest operating income in the company since the first quarter of last year (from Jan. through Mar.)

LG Electronics sees that the earnings improvement was due to the global success of both “G3,” its strategic smartphone, and “L Series III,” a secondary brand. In fact, LG sold a total of around 16.8 million smartphones in the third quarter, the largest quarterly sales.

However, other business groups were weak.

The air conditioner and energy (AE) business group, which produces air conditioners, had a profit of 164.2 billion won (156.7 million dollars) in the second quarter, but it had a loss of 2.5 billion won (2.3 million dollars) due to the downturn of the domestic home air conditioning market. The home appliance (HA) business group, which produces home appliances such as refrigerators and washing machines, recorded only 51.8 billion won (49.4 million dollars) in operating income, which is much less than 97.8 billion won (93.3 million dollars) in the second quarter. “We expect the sales growth of premium televisions like ultra high-definition televisions and smartphones will continue in the fourth quarter,” a source from LG Electronics said.” “We will also actively tap the B2B market such as digital signage.”

LG Innotek, an electronic parts maker which announced third quarter earnings on the same day, also relished the benefit of LG Electronics’ smartphone effect. LG Innotek said in the company filing that it had 1.6 trillion won (1.57 billion dollars) in revenue and 102.9 billion won (98.22 million dollars) in operating income in the third quarter. It had a record high result both in revenue and operating income.

LG Innotek said, “As LG Eletronics selles more smarphones, we sold more their key parts such as camera modules and touch screens, which contributed to our earnings.”