As LG Elec profit skids, home appliance lift cushions smartphone losses

[October 29, 2015]  By Se Young Lee

SEOUL (Reuters) - South Korea's LG Electronics Inc reported a 37 percent slide in quarterly profit as its mobile device business lost money, but still beat market expectations on strong home appliances earnings and sales of high-end televisions.

The world's No.2 television maker behind Samsung Electronics Co Ltd said third-quarter operating profit was 294 billion won ($257 million), down from 465 billion won a year earlier. That beat a 266 billion won forecast from Thomson Reuters SmartEstimate, derived from a poll of 29 analysts.

Global consumer electronics makers have generally struggled this year as weaker economic growth in China and currency depreciation in key markets such as Brazil and Russia have hurt demand for TVs and other consumer electronics. LG shares are down 10.3 percent for the year.

But LG said the July-September quarter saw operating profit for its home appliances division rise more than fivefold from a year earlier to 246 billion won, buoyed by sales of high-end products such as household washing machines and air-conditioning products for business clients.

LG's TV division reported an operating profit of 37 billion won, recovering from a 82.7 billion loss in April-June though well down from 134.5 billion won profit a year earlier. Sales of premium products such as ultra-high definition and organic light-emitting diode televisions improved from the previous quarter, the firm said.

Meanwhile LG's mobile device division reported an operating loss of 77.6 billion won, compared with 168.6 billion won profit in the third quarter of 2014.

LG said smartphone sales during the period fell 11 percent from a year earlier as competition intensified. Its mobile handsets have been squeezed between rival offerings from Apple Inc, Samsung and Chinese players, but LG said it expects profitability will improve in the fourth quarter as it launches new products while cutting costs.

Beyond its home appliance and mobile device operations, LG hopes gathering momentum in the global electronic auto components business may deliver a new growth engine.

The company's deal to supply key parts for General Motors Co's Chevrolet Bolt electric cars will help it gain more clients and boost car-related sales of components like sensors, analysts say.

(Additional reporting by Sohee Kim; Editing by Kenneth Maxwell)

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