LG Mobile reports $132M loss as flagship G5 gets off to a slow start

Flagship phones are often make or break in the mobile industry. Just ask LG. The Korean company’s G5, an ambitious effort at modular devices, continues to weigh on the company’s financial performance this year.

LG announces its Q2 2016 report today and, in short, its mobile business is still some way from breaking even. While LG Electronics — the entire group — posted an operating profit of KRW 584.6 billion ($503.10 million), up 140 percent on the previous year, LG Mobile dragged things down with a KRW 153.5 billion ($132.10 million) loss for the period, though that is a 35 percent improvement on the loss in Q1.

LG shipped 13.9 million devices over its most recent three-month period, that’s higher than the 13.5 million it recorded in the previous quarter but lower than the 14.1 million from one year ago. The mobile business saw overall revenue lag, too. Its Q2 2016 revenue came in at KRW 3.33 trillion ($2.86 billion), an increase on the previous quarter — KRW 2.96 trillion ($2.46 billion) — but down nine percent year-on-year.

The company said the quarter’s loss “reflected increased marketing expenditures and somewhat slow initial sales of G5 smartphone.” LG didn’t give an exact figure for G5 sales, but it did convey its hope that a slate of new lower-end devices — the new V series and more devices within with K and X series — can reverse its fortunes in the next quarter.

LG’s mobile play might not be going as swimmingly as Samsung, which just recorded its most profitable quarter for two years, but it does have other business units to crow about.

This latest quarter’s impressive profit and KRW 14 trillion ($12.05 billion) in revenue — up just 0.5 percent year-on-year but five percent quarter-on-quarter — is predominantly down to its home appliance and air solutions and home entertainment units which pulled in record revenues.

Sure, air conditioning may not be as sexy as smartphones — don’t say that to Xiaomi — but with a KRW 433.7 billion ($373.24 million) profit on revenues of KRW 4.70 trillion ($4.04 billion), the division was LG’s stellar performer courtesy of increased sales in Europe, Korea and the rest of Asia.

Likewise, the home entertainment division carded an operating profit of KRW 356.7 billion ($306.97 million) on revenues of KRW 4.16 trillion ($3.58 billion).