SEOUL (Reuters) - 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 244 billion won ($211 million) from 610 billion won in the same period a year earlier. That was its weakest three-month profit since fourth-quarter 2013, and well below a 395 billion won mean estimate from a Thomson Reuters I/B/E/S survey of 33 analysts.
“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 82.7 billion won its worst since fourth-quarter 2010 - compared with a 159 billion won profit a year earlier and a 6.2 billion won loss in January-March.
The mobile communications division eked out a 0.2 billion won profit as smartphone shipments shrank from a year earlier.
While LG launched its G4 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.
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.
Editing by Kenneth Maxwell