LG forecasts record Q1 profit despite its struggling smartphone division

LG’s mobile business may be a serial loss-maker, but the rest of the Korean firm’s interests are doing pretty well… better than ever actually according to its newest earnings forecast.

Like fellow countryman Samsung, LG is on course for company-record Q1 financial results. The company is predicting an operating profit of 1.1 trillion KRW ($1.03 billion) on total sales of 15.1 trillion KRW ($14.1 billion) for the quarter.

That’s up 20 percent year-on-year and it represents the first time LG has made a profit of over 1 trillion KRW in the first quarter of the financial year.

The financial forecasts don’t include in-depth analysis of LG’s divisions — the full earnings are due later this month — so we don’t yet know what is driving this record for sure. Carrying on from its Q4 earnings, which helped 2017 become LG’s most-profitable financial year since 2009, we know that the firm’s home appliance and TV divisions were the star performers, while its home entertainment division saw operating income jump 134 percent to hit $345.96 million.

LG Mobile is likely to once again drag the numbers down.

Its newest device — the V30S ThinQ — is unlikely to move the needle with consumers as TechCrunch’s Brian Heater noted when he reviewed the device at Mobile World Congress in February.

To give credit, new LG Mobile CEO Hwang Jeong-hwan — who took the top job in November — managed to reduce losses from 375.3 billion KRW ($331.37 million) in Q3 to 213.2 billion KRW ($192.33 million) in Q4, but turning the division profitable is much harder than cutting the bleeding.

LG Mobile has posted just one-quarter of profitability over the last two years, that was a small $3.2 million profit Q1 2017, the first quarter of sales of its G6 flagship. Previous to that, you have to go way back to Q1 2015 to find a positive quarter for its mobile division.

“Due to the challenging business environment of smartphones, the mobile communications arm is presumed to have not posted a sharp improvement in performances,” NH Investment & Securities said in a note according to Yonhap.

That said, the company’s newest flagship phone — the G7 — is rumored to be dropping next month, so it won’t be too long before we can see what the new management team has in mind.