LG reports ~10% sales bump in Q1, mobile revenues up 4% QoQ, 2% YoY
LG Electronics has posted its Q1 2017 results, which show a nearly 10 per cent year-over-year jump in revenue. The electronics maker is reporting KRW 14.66 trillion ($12.70BN) in revenue, an increase of 9.7 per cent from the same period last year. While its operating income (profit) nearly doubled, to KRW 921.5 billion ($798.3M).
On the mobile front, the quarter was an important one for LG which launched a new flagship smartphone, the LG G6, whose twist is a 2:1 aspect ratio display — prompting TechCrunch’s Romain Dillet to write that taller screens are the future of smartphones.
Rival smartphone maker Samsung subsequently outed its new flagship handset, the Galaxy S8, which also has a tall form factor and an elongated aspect ratio. While rumors suggest Apple’s next iPhone(s) might also pack taller screens. So LG’s bet on stretching the smartphone on its vertical axis, to add more real estate without turning the device into a palm-stretching phablet, looks to be onto something.
Compare that to the prior year when LG bet on a fiddly (and as it turned unpopular) modular smartphone design, with the G5, and it’s clear how much of a reorganization its mobile division has undergone — with what looks like promising early results.
LG’s quarter also clearly benefited from it beating Samsung to the punch with its 2017 flagship smartphone launch. The G6 went on sale in its home market in early March vs Samsung’s S8 only launching this month, after it had to divert resources to dealing with last year’s Galaxy Note 7 recall. So the delayed launch of the S8 clearly gave LG’s G6 a window of time to shine and grab smartphone buyers’ attention. (Samsung has also posted its Q1 results today — which records a revenue drop for its mobile division.)
LG said its mobile division generated revenues of KRW 3.01 trillion ($2.61BN) in the quarter, an increase of 4 per cent quarter-over-quarter and 2 per cent year-over-year — attributing the rise to the launch of the G6 and new mass-tier models. Smartphone shipments were 14.8 million units in the quarter, up 10 per cent from year before quarter — with LG attributing the growth “in large part” to sales in “the Americas”.
Despite some uplift for its mobile division, the company does also caution it expects price competition in the mass tier segment and competition from other flagship smartphones to ramp up this year. So it will be interesting to see whether it can sustain its early momentum.
Beyond its mobile business, LG said its Home Appliance & Air Solutions division posted its highest quarterly operating income in eight years, reporting a 10 per cent increase in first-quarter sales vs the year ago quarter and 15 per cent higher, quarter on quarter. Revenues for the division were KRW 4.64 trillion ($4.02BN).
While it flagged up its Home Entertainment division recorded its highest first-quarter operating margin of 8.8 per cent on sales of KRW 4.33 trillion ($3.75BN).
LG also has a Vehicle Components division, and said this reported “strong” sales of KRW 876.4 billion ($759.2M), a 48 per cent rise from the first quarter of 2016 — which LG mostly credits to a collaboration with General Motors on the Bolt electronic vehicle.
It adds that continued investments in R&D and growth are expected to continue to affect profitability this year. It’s holding a conference call on the earnings on April 28, at 09:00 Korea Standard Time (00:00 GMT/UTC).