LG’s mobile sales up 10%, nearly returns to profitability thanks to the G6

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LG’s mobile sales up 10%, nearly returns to profitability thanks to the G6

LG isn’t out of the woods yet, but this quarter was a good start.
LG’s financial shortcomings in its “Mobile Communications” division are well known, but its Q1 2017 earnings report paints an improved picture. LG sold 14.8 million phones in the quarter, which was a solid 10% jump from this time last year. For the first three months of the year, LG’s mobile division had revenues of $2.61 billion, which was up 4% quarter-over-quarter and 2% year-over-year — LG says the improvement was driven by strong sales in the Americas of the new LG G6 and many mass-market models.
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Though the small bump in revenues is good, the important change has been on the backside where structural changes have cut costs and nearly returned the division to profitability. The Mobile Communications business lost money overall, but it was basically a rounding error — meanwhile its operating margin improved to 0%, which is a heck of a lot nicer than the -10% it has been hovering around for the last year.
LG’s other divisions are much larger, but Mobile Communications still has to be profitable.
While LG’s other divisions — like home entertainment and home appliances — are much larger and more profitable than the mobile division, it has been a point of emphasis for LG to return its mobile division to profitability after several weak quarters. Looking at the results in Q2 will paint an even clearer picture of where LG’s mobile business stands, as it will include a full three months of LG G6 sales, and presumably another month of streamlining the business into profitability.
Despite annoying regional differences and a long delay before launch, the LG G6 has been received much better than the LG V20 or LG G5 of 2016 — something LG will hopefully be riding for both sales but also some brand awareness going through 2017. Whether you care for LG’s current lineup of phones or not, I think we can agree it’s important to have another strong competitor to Samsung at the top end of the Android market, if not in other lower-end market segments as well.
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