LG Electronics announced Thursday that it posted 217.8 billion won ($196.34 million) in operating profit and 13.9 trillion won ($12.5 billion) in sales revenue in the third quarter due to increased marketing costs and fierce competition.
The performance is a drop of 54.6 percent and 8.8 percent, respectively, compared to the previous quarter this year. But it is an increase of 27 percent in operating profit and 4.6 percent in sales compared to the same period of last year.
Despite its all-out efforts to revive the smartphone business by releasing its flagship G2, LG's mobile communications business unit recorded an operating loss of 79.7 billion won while raking in 3.05 trillion won in revenue.
“The profit loss is due to increased marketing costs and fierce competition among rival mobile manufacturers,” the electronics firm explained in its financial report.
LG, which accounts for 5.3 percent of the world’s smartphone market in the second quarter of this year, is the third-largest smartphone maker after Samsung and Apple, according to Strategy Analytics, a market research firm.
The company shipped 12 million smartphones in the third quarter.
It has long lost market share to its competitors Samsung and Apple, and is now challenged by emerging Chinese firms such as ZTE and Huawei.
LG’s home entertainment company marked sales revenue of 5 trillion won ($4.5 trillion), down 7 percent from the same period a year ago, and an operating profit of 124.4 billion won ($111.7 million).
Its home appliance company earned 3 trillion won in revenue, up 3 percent from the previous year, and 109.2 billion won in operating profits.
Hyundai Motor’s net profit increases 4%
Hyundai Motor’s third-quarter net profit increased 4 percent to 2.25 trillion won from a year ago, slightly missing market forecasts, as the carmaker struggled on its home turf due to slowing sales and production losses.
The Korean auto giant posted an operating profit of 2.1 trillion won and sales of 20.81 trillion won in the July-September period. The carmaker sold 1.1 million cars globally during the same period, up 10.8 percent from a year ago.
Hyundai saw its domestic production fall 0.6 percent amid prolonged labor disputes at its Korean plant, but it made up the losses through overseas factories, especially those in Brazil and China.
The company ruled out the possibility for a new manufacturing plant, predicting it would achieve its original production goal of 4.65 million cars this year as previously planned.
“We need assurance for sales growth to consider building a new plant. For the time being, we have no plan to do that,” said Kim Young-tae, a Hyundai finance executive, during a conference call at the Seoul headquarters.
POSCO’s operating profit falls
The third-quarter operating profit of POSCO, the nation’s top steelmaker, fell 40 percent to 633 billion won ($598 million) on-year due to a slump in sales and a rise in raw material prices, the company said Thursday.
POSCO’s revenue also dropped 4 percent to 15.2 trillion won in the third quarter from a year earlier.
According to market watchers, the average sales price of POSCO’s steel products dropped by 15,000 won per ton in the third quarter over the previous quarter, affecting the profitability of the world’s fifth-largest steelmaker.
The steelmaker’s profitability worsened in the third quarter as a price hike in steel products in the domestic market was delayed and the strong Korean won pushed up the price of steel exports.
Seasonal factors also had a negative impact on sales of steel projects in the third quarter, the company said. Demand for steel products traditionally falls during the summer session.
But POSCO expects its business performance to improve in the fourth quarter. Dongbu Securities forecast the firm’s revenue and operating profit are expected to increase 7 percent to 16.3 trillion won and 30 percent to 907 billion won, respectively, on-quarter.
