South Korea’s electronics giant LG Electronics Inc. on Thursday reported solid earnings for the second quarter on brisk sales of its home appliances and premium TV products, but its mobile phone business again failed to return to profit due to tepid sales of its much-hyped flagship G6 smartphone.

LG Electronics on Thursday said in a regulatory filing that it posted 664.1 billion won ($596.4 million) in operating income in the second quarter ended June, up 13.6 percent from the same period last year. Sales have risen 3.9 percent to 14.55 trillion won over the same period while net income has nearly doubled to 514.9 billion won.

But the company could have raised more profit in the cited quarter unless its poor smartphone sales have eaten away at stellar performance of its home appliances and TV businesses. Its shares ended down 2.1 percent, or 1,400 won, at 66,500 won on Thursday.

According to the company, its mobile & communication (MC) division reported operating loss for a ninth consecutive session in the April-June period after demand for its latest flagship G6 smartphone remained weaker than initial expectations.

When the company released the G6 earlier this year, it was upbeat that the new smartphone series would revive its money-losing MC division. As the deficit was sharply reduced to 200 million won in the first quarter, expectations have further grown that the phone division could turn out profit this year.

Against the market expectation, the loss in MC business has widened to 132.4 billion won from a quarter ago while sales plunged 21 percent from a year ago to 2.7 trillion won. Experts recently forecast sales of the G6 flagship smartphone series to have fallen short of its target of 2 million units.

The company hopes it can make up losses with the launch of new models including the premium V20 smartphone series and Q6 series, mid-range variants of the flagship G6 models, this year.

Its home appliance (H&A) division selling washing machines, air conditioners and refrigerators raked in 465.7 billion won in operating profit in the second quarter, up 7.4 percent on year on sales of 5.25 trillion won that has helped the company more than offset a rise in raw material and marketing costs. Sale of both mainstay products such as air conditions and washing machines, as well as new niche products such as air purifiers and dryers have remained brisk in the Korean market, and demand for its white goods in North America has been steady, the company said.

Home entertainment (HE) unit whose main focus is TV sale has also earned 343 billion won in operating profit in the same period on sales of 4.2 trillion won. Sales were up 1.9 percent from a year ago thanks to strong demand for its high-end television models such as organic light-emitting diode (OLED) TVs and ultra high-definition TVs, helping the company successfully fend off soft TV demand in general and a rise in panel prices. Operating income edged down on year, but HE division’s operating margin reached 8.1 percent.

Its vehicle components (VC) division, another loss-making business in LG Electronics, has remained in the red in the second quarter, reporting an operating loss of 16.4 billion won on sales of 882.6 billion won. Despite the increase in sales, the division failed to turn around due to hefty investment in exploring new business opportunities and developing novel technologies.

For the third quarter, LG Electronics forecast a significant improvement in its earnings on strong performance of its home appliance business.

The company projected on Thursday a steady rise in demand for air purifiers and dryers in the local market while sales of its flagship white goods in North America and Europe would continue to rise thanks to the recovery in the global economy.

The company also aims to up sales of premium products in the global market, such as its luxury knock-on magic space refrigerator, twin-wash washing machine, as well as the refrigerator with a see-through window that allows its users to see what is inside by knocking on the fridge door without opening the door.

By Kim Dong-eun and Yoon Jin-ho

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