South Korea’s LG Electronics Inc. said on Friday that its operating profit for the third quarter is estimated to have dropped 3.7 percent from a year-ago period due to sluggish smartphone sales and weaker seasonal demand on home appliances.

LG Electronics in a regulatory filing on Friday said it expects to post 283.2 billion won ($253.9 million) in operating profit on sales of 13.2 trillion won on a consolidated basis in the third quarter ended September 30. The operating profit and sales fell 3.7 percent and 5.8 percent each when compared to the same period last year and dropped 51.6 percent and 5.6 percent each on quarter. The company would release detailed and final earnings later this month.

The firm had a fair start this year by registering 505.2 billion won in operating profit in the first quarter and 584.6 billion won in the second quarter. Its half-year operating exceeded 1 trillion won for the first time in two years. But its full-year operating profit is predicted to hover below 1 trillion won as the likelihood for the electronics maker to improve its business in the fourth quarter is low.

The mobile business had continued registering losses for six quarters straight since the April-June quarter last year and posted about 350 billion won in operating loss in the first half this year. Industry watchers expect the mobile division would have posted around 250 billion won in operating loss in the third quarter. The losing streak in the mobile business is predicted to continue in the October-December period due to the reduction in shipment of its flagship G5 smartphone, said Noh Geun-chang, an analyst at HMC Investment Securities Co.

The home appliance division’s September-quarter operating profit shrank compared to the previous quarter due to weaker seasonal demand but it is expected to have sustained profits. The business has kept upward momentum propelled by high-end and small home appliance sales on top of its effort to up its shares in the global home appliance market, said Lee Jung, an analyst at Eugene Investment & Securities Co.

The television and audio business is expected to have experienced a slight fall in profitability due to the hike in display panel prices. But industry watchers estimate the TV and audio division to have recorded around 200 billion won in operating profit in the third quarter, making a huge leap compared to the same quarter last year with 37.0 billion won, thanks to premium lineups such as its Signature organic light emitting diodes (OLED) TVs.

LG Electronics shares closed Friday at 48,400 won, down 200 won or 0.41 percent from the previous session.

By Lee Seung-hoon

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