As expected, LG’s second-quarter of 2019 was quite difficult. The total turnover was 13.40 billion dollars, and this is just a slight increase: +4.1% compared to the same period last year. Net earnings were $559.4 million, representing a 15% contraction compared to last year. The group is essentially driven by the household appliances division. Which records a revenue of 5.23 billion, + 16.1% compared to last year; the most important markets for the company were the Korean, North American, European and Middle Eastern markets.
LG main problems
The problems are mainly the mobile division and on that dedicated to home entertainment- ie TVs. If in the first case it has unfortunately been a constant for many years now. The TV business has historically been one of the strengths of the group. In this quarter, however, the revenue of this division fell by 4.5% compared to last year. For LG the problem was the decrease in demand in the Americas. Given that last year there were important sporting events that had given big sales boost.
LG also reports a reduction in net earnings, equal to 176.3 million dollars, caused by greater promotional investments, to face the increase in competition. In the next quarter, the company expects a return to growth. Especially in the premium segment – namely OLED TV, NanoCell and Ultra HD. However, they are the same considerations made during the previous quarterly report, which did not materialize.
The mobile division
For mobile, the contraction in the revenue is much more pronounced. It drops to 1.38 billion dollars, 21.3% less than last year. LG blames a stagnant market and an increasingly aggressive pricing policy by Chinese manufacturers. Net losses increased by $268.4 million, again caused by greater investments in the promotion of new smartphones.
The costs of relocating the factories in Vietnam should also be in mind. Three months ago, LG was optimistic especially thanks to a convincing debut of the V50 ThinQ. But in the end, the revenue decreased and the losses increased.