LG Electronics Inc. reported a significant rise in operating profit for the third-quarter, beating analysts expectations thanks to increased smartphone sales.
LG reported revenue of KRW 14.92 trillion in the third quarter, a 7.4% increase compared to a year earlier, which led to more than doubled operating profit of KRW 461 billion and a 87% rise in net profit to KRW 202.6 billion.
LGs strong results contrast to Samsungs expectations of a 60% drop in third-quarter earnings. Samsung has been facing slow sales of its new phones due to increased competition from lower-cost Chinese competitors.
“LG has benefited from Samsung’s struggle amid weak sales of the Galaxy S5,” said Marcello Ahn, fund manager at Quad Investment.
Revenue from the companys mobile communications division increased 39% to KRW 4.2 trillion compared to last year and 17% on a quarterly basis. The company shipped 16.8 million smartphones due to strong performance by its new G3 and L-series. Operating income of the division reached a record KRW 167 billion.
After a second consecutive quarter of gains in its mobile communications division, LG plans to maximize sales of its cheaper L-series and in the premium segment especially for G3 and its variation.
Operating margin in the mobile division rose 3.9% in the three months ended September, second quarter above the zero line. In the previous quarters operating margin stood at 2.4% and -0.3%.
According to Counterpoint Research data, LG raised its handset market share to 27% in South Korea in the third quarter, compared to 18% a year earlier, while Samsungs share fell from 66% to 60%.
LG executives hope that the development at home will help them increase their influence in overseas markets and gain more partners.
“Before, they didn’t even spare us a glance. But now, most carriers take our products without any doubt,” said Chris Yie, a vice president of marketing at LG’s mobile division. “It comes down to what kind of benefits our product can provide to customers, because we can’t earn money without customer satisfaction.” He added that Samsungs new curved screen featured in the Galaxy Note Edge will face competition from LG as the company is already working on flexible screens.
Orders from global companies for LGs latest G3 smartphone have increased 30% compared to its previous model. Around 170 carriers booked the G3 at its launch on May 27 in South Korea, including the big four U.S. telecoms.
LG Electronics Inc. gained 4.31% on Wednesday to close at KRW 67 800 at in Seoul, valuing the company at KRW 11.095 trillion.
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