LG Electronics: slowly turning the corner

LG Electronics Co.’s handset volume growth is slow, but the company posted improved sales figures and operating margins in the first quarter.
Handset revenue at the Korean industrial giant was reported to be $2.5 billion, up nearly 25 percent from the year-ago quarter, and represented about 38 percent of the diversified parent company’s sales. Net profit in LG’s handset business was not reported.
The number of handsets shipped in the quarter was 15.8 million, up more than 12 percent over the year-ago quarter, marginally better than the 15.6 million shipped in the year-ago quarter, but below the third- and fourth-quarters.
The company’s operating margins-one metric of profitability-in the mobile communications division, dominated by its handset business, was 4.7 percent, up substantially over the 2.6 percent in the year-ago quarter.
According to Strategy Analytics, LG’s market share in the first quarter was 6.3 percent, down from 6.9 percent in the year-ago quarter, but on par with its overall results last year. Of the top five vendors, only LG and Motorola Inc. lost market share over the year-ago quarter. The other three top-tier vendors increased market share year-on-year.
Based on LG’s renewed focus on cost-cutting and profitability, which helped improve operating margins, Strategy Analytics said the company is showing “tentative signs” of a comeback from last year’s lackluster results.