Electronics giant LG is out with earnings today that continue to paint a grim picture for its struggling mobile division — a division that spent big to prep for the launch of its next flagship phones in May, and which also hasn’t turned a profit for five straight quarters now.
LG on the whole is riding high, with the Korean company posting an operating profit percentage increase in the double digits and hitting the equivalent of $715.1 million. LG even says its sales and profit have hit record highs this year, all while its mobile division nevertheless remains a nettlesome asterisk.
The company has been struggling to figure out how to staunch the bleeding. LG for now is blaming a global slowdown in smartphone sales, especially in sales of lower-end models in Latin America. Also driving the division’s losses at the moment, the company continues, are the money it spent on marketing tied to the release of the LG G7 ThingQ and LG V35 ThinQ, among other things.
“The second-quarter operating loss was largely due to contracting sales and increased marketing investments to support new flagship smartphone launches,” LG said in a release. “With competition in the premium smartphone category expected to intensify and growth to remain stagnant in the second half, the company will seek to further improve its business structure and increase sales of the new premiumLG G7 ThingQ and LG V35 ThinQ flagship smartphones in key markets around the world.”
Robust TV sales, meanwhile, helped the company overcome its stagnating smartphone unit. Really, basically all of the company’s other businesses are making up for it. Company-wide, LG’s operating profit for the second quarter was up 16.1 percent over the same period in 2017.
The company announced a shake-up in the mobile division back in November, bringing in a crop of new executives as part of what LG touted as a “sweeping realignment to better address the challenges ahead.” Since then, it’s still apparently found it to be too tall of an order to try and stand out in the Samsung- and Apple-dominated smartphone space.
This quarter’s results also drive that point home even more — noting that a big marketing spend hasn’t been enough to turn things around, either. To that end, Phonearena asks the obvious question.
“With all due respect, it doesn’t feel like LG’s phones have a problem just in one region around the world. The question is how long will ‘premium’ home entertainment products and home appliances and air solutions be expected to ‘offset’ the losses of the G, V, K, and Q-series handsets?”