LG Electronics expects its operating profit for the second quarter to fall 15.4% compared to the same period from last year, it said in its earning guidance.
The South Korean electronics maker said it expects revenues of 15.6 trillion won and operating profit of 652.2 billion won, an increase of 4.1% and decrease of 15.4%, respectively.
The expected decline in profit is due to the lower than expected sales of its OLED TVs and the continued losses from its mobile business.
KB Securities analyst Kim Dong-won said LG’s home appliance business would probably see improved profits, but the expanded shipment of QLED TVs by Samsung would dent LG’s profitability in its TV business.
In regards to LG’s mobile business, Kim said there would likely be a higher losses compared to the previous quarter due to increased marketing spending from promoting new smartphones.
Mirae Asset Daewoo analyst Park Won-jae said it was time for LG to take a “strategic approach” as Samsung QLED TV sales are gaining popularity while its OLED TV have experienced lower than expected sales.
Park also expects the mobile business to have operating losses of around 200 billion won, saying the sale figures of LG’s smartphones are dropping fast and hurting the company’s brand.
LG’s mobile business accumulated an operating loss of 790 billion won last year and has been in the red for several years.
Its V50 ThinQ 5G, which launched in May in South Korea, initially gained traction from consumers due to the lack of 5G-capable smartphones in the market. Demand for the V50 ThinQ 5G has since tapered however, as telcos have increased subsidies for consumers looking to buy the Galaxy S10 5G.
LG is expected to release its full fiscal report at the end of the month.
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