SEOUL (Reuters) - LG Electronics Inc (066570.KS), the world’s No.2 TV maker, said on Wednesday quarterly profit more than doubled on a jump in TV sales but its cellphone business swung to a loss, squeezed by growing competition from Apple and Samsung as well as low-cost producers in China.
The South Korean firm has gained market share from struggling Japanese TV manufacturers in recent quarters but its main profit earner is also set to face some challenging months ahead as the euro zone crisis saps demand in Europe - a region it is heavily exposed to.
Its cellphone business, which accounts for around one-fifth of sales and has drawn comparisons with struggling rivals like Nokia NOK1V.HE, also has to contend with a widely expected launch of a new iPhone from Apple (AAPL.O) and robust sales for Samsung’s (005930.KS) new Galaxy smartphone.
April-June operating profit rose to 349 billion won ($304.5 million) from a 158 billion won profit a year ago, in line with a consensus forecast for 345 billion won by 21 analysts surveyed by Reuters. In the previous quarter, profit was 448 billion won.
Unable to break into the high-end smartphone market and forced by competition from China’s ZTE (000063.SZ) and Huawei HWT.UL to lift marketing costs for cheaper phones, LG’s mobile unit made a loss of 59 billion won after two profitable quarters.
With annual growth for LCD TVs slowing to 5 percent and the overall global TV market expected to shrink by 1.4 percent this year, how well LG manages to differentiate its cellphone products will be key to future growth.
Shares in LG, valued at over $8.5 billion, fell 0.2 percent after the earnings announcement, versus a 0.7 percent drop in the wider market .KS11.
The stock hit a nine-month low last week. It has fallen over 20 percent over the past three months, underperforming a 7 percent drop in the broader market.
Reporting by Miyoung Kim; Editing by Edwina Gibbs