By Kim Yoo-chul
LG Electronics is hoping the worst is over.
The electronics giant wants a fresh start in the next quarter and signs show it may just get its wish.
It has trimmed losses in its crippled mobile handset business. The second-quarter performance showed it largely beat expectations. Immediately after the announcement, its stock went up Wednesday.
Its component affiliate, LG Innotek, has seen a turnaround in terms of operating profit in the second quarter of this year from the previous one, raising expectations that LG Group’s electronic businesses will be stabilized in upcoming quarters.
On Wednesday, the Seoul-based LG Electronics reported 158 billion won in operating profit during the April-June period, a 25 percent increase over the same period of last year, because its handset business rapidly trimmed losses and its TV division returned to profit, according to its regulatory filing.
``LG Electronics fared well despite slower demand for consumer electronics amid the recent global economic recovery. The second half will even be better than the first because our smartphone business has shown clear signs of recovery,’’ said Oh Sea-chun, a senior LG spokesman.
The steady improvements in profit is expected to give a boost to LG chief executive Koo Bon-joon, younger brother of LG Chairman Koo Bon-moo, to push his initiatives in making quality-enhanced products.
LG Electronics transferred its so-called quality-control team under the direct control of the chief executive as part of its plan to improve product quality.
By division, its home entertainment unit, which includes the television business, has registered increased profits, driven by solid sales of 3D and LED-backlit LCD television sets.
LG said along with TVs, its smartphone division was another hidden factor that resulted in LG extending a winning streak as the division further trimmed operating losses on the back of solid sales of its strategic smartphone models the Optimus One and Optimus 2X.
LG sold 24.8 million mobile phones during the second quarter with the sales of its smartphones rising by 50 percent over the previous quarter.
LG was late arriving in smartphones. Its former CEO Nam Yong resigned from the top position, taking full responsibility for a rapid deterioration in profit.
LG’s home appliances division, which is traditionally strong, clinched record quarterly revenue of 2.88 trillion won in the quarter. The division is responsible for white goods such as air-conditioners and refrigerators.
As for the business outlook, LG has mixed views.
Although it sees a stalled growth in demand for TVs because of a delayed recovery in the global economy, the consumer electronics giant plans to promote its 3D TV units and value-added smartphones in their key markets, Oh said.
LG reported 14.3 trillion won in total revenue for the second quarter. Net profit was 108 billion won, it said in the filing.
LG announced the quarterly results based on a consolidated balance sheet, an international accounting measurement that includes LG’s overseas performances.
Meanwhile, LG Innotek reported a turnaround to profit as the global market for LED-backlit LCD applications has bottomed out.
Innotek reported 1.17 trillion won in revenue in the second quarter, while the operating profit was 5.9 billion won. Its sales increaseed 7 percent from the previous quarter, LG said in a separate regulatory filing with the Korea Exchange (KRX).
``Innotek will continue to diversify its business portfolio for sustainable corporate growth,’’ said company spokesman Jung Jae-wook.
Innotek makes LED chips and camera modules. Apple is one its of top clients.
Shares of LG Electronics rose by 2.57 percent to end at 83,800 won Wednesday, while those of LG Innotek jumped 2.12 percent to 96,400 won, data from the KRX showed.
``With a recovery in smartphones, LG Electronics shares will be strong. Downside risks are limited,’’ said Kim Ji-san, an analyst at Kium Securities which maintained its target for LG at 130,000 won per share.
``LG Electronics shares will be co-related to profits in smartphones. The thing is it is getting better.’’