Tough Smartphone Market Hits LG Profits
‘Extremely challenging environment’ sees drop in LG phone sales and overall profit despite G4 launch
LG has reported a modest rise in smartphone profits as it battles with what it called an ‘extremely challenging environment’.
The South Korean manufacturer suffered a three percent year-on-year decline in smartphone shipments, as overall second quarter sales hit 3.65 trillion won (£2 billion) – an increase of just one percent.
This was despite releasing its latest flagship device, the LG G4 (pictured), back in April, although the company still hopes it will boost sales in the next quarter.
Demand and supply
The results seem even more surprising given the fact that LG sold more than 8.1 million LTE smartphones worldwide in the quarter, its highest ever.
However overall profitably was affected by weaker demand in the premium segment in the domestic Korean market, although other markets performed better than expected, including North America, where it saw revenues increase by 36 percent year-over-year due to better performance of mid-range smartphones and tablets.
LG now looks to continue its growth by releasing a range of new products and investing in more aggressive marketing for existing offerings such as the G4.
The company is also heavily rumoured to be in the midst of building one of the next Nexus smartphones for Google, a move which would certainly help to boost revenues.
Elsewhere, LG reported an overall 7.6 percent year-on-year drop in smartphone sales to record revenues of 13.93 trillion won (£7.7bn).
This was helped by strong performances from its home appliance business, which saw a ten percent increase in sales in the quarter, meaning profits were up six percent to hit 4.49 trillion won (£2.6bn).
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