LG's mobile unit sees a sales decline in Q2 2017 as demand for the G6 wanes

LG's overall profit margins take a hit as mobile unit posts a $117 million loss.

LG's mobile unit recorded a strong 10% increase in sales in Q1 2017, but the resurgence was short-lived. In its second quarter earnings, LG noted that its mobile unit recorded a loss of $117 million (132.4 billion won) on revenues of $2.39 billion (2.70 trillion won).

LG attributed the decline to weaker than expected sales of the LG G6 combined with an increase in component costs. The G6 is LG's strongest showing in years, but it looks like it wasn't enough to mount a significant challenge to the Galaxy S8.

The South Korean company saw more momentum from its budget devices in the North American market, with sales increasing 13%. LG is now counting on the introduction of a new high-end model — likely the LG V30 — to boost sales in the premium segment next quarter. The company will also launch a new model in the Q series in the coming months.

LG as a whole netted a revenue of $12.8 billion (14.55 trillion won), a 4% increase from the same period last year. Operating income of $588.2 million (664.1 billion won) was 13.7% higher than Q2 2016, with LG's other business units — home appliances, home entertainment, and vehicle components — posting healthy profits. The home appliance unit saw a 12% hike from Q2 2016, and the vehicle components division, which supplies telematics components to the Chevrolet Bolt, saw a 38% increase in sales.

With the mobile unit once again in the red, LG now has to rethink its strategy in the smartphone segment.



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