LG Electronics Q2 Profit Slumps on Weak TV and Smartphone Sales

South Korea's LG Electronics Inc said on Wednesday its quarterly profit skidded 60 percent, plummeting below estimates, as sales of televisions and smartphones buckled under weaker demand and intense competition from rivals.

LG, the world's No. 2 TV maker after Samsung Electronics Co Ltd, said second-quarter operating profit fell to KRW 244 billion (roughly Rs. 1,347 crores) from KRW 610 billion in the same period a year earlier. That was its weakest three-month profit since fourth-quarter 2013, and well below a KRW 395 billion mean estimate from a Thomson Reuters I/B/E/S survey of 33 analysts. Net profit dropped to KRW 226.39 billion (roughly Rs. 125 crores) from KRW 411.83 billion a year earlier.

"While the second quarter was more challenging than expected, LG is confident it can recover lost ground in the third quarter with new competitive products and more effective marketing initiatives," the company said in a statement.

But as LG struggles to make its smartphones to stand out in an increasingly crowded field, many analysts have slashed forecasts for the firm in recent weeks, also citing slack global TV sales and weaker emerging market currencies that sap profit margins.

The company's TV division reversed into a quarterly operating loss of KRW 82.7 billion its worst since fourth-quarter 2010 - compared with a KRW 159 billion profit a year earlier and a KRW 6.2 billion loss in January-March.

The mobile communications division eked out a KRW 0.2 billion profit as smartphone shipments shrank from a year earlier.

While LG launched its G4 (Review) flagship smartphone in South Korea in late April, analysts said the phone did not offer enough new features to stand out against competing devices, such as Apple Inc's iPhone 6 models and Samsung Electronics' Galaxy S6 models. LG's global smartphone shipments of 14.1 million units reflected a 3 percent decline from the same period last year.

The company's stock touched its lowest level in more than 12 years last week, reflecting growing worries about the firm's business outlook. On Wednesday, the shares closed up 1.7 percent, before earnings were published, while the benchmark Seoul index ended 01 percent lower.

Written with inputs from Reuters