Thaindian News

Seoul, Oct 26 (IANS) LG Electronics said Wednesday that its earnings turned into the red in the third quarter due to struggling smartphone business.

Consolidated operating loss, which includes losses from its units, stood at 31.89 billion won ($28.2 million) during the July-September period compared with an operating profit of 158.23 billion won three months earlier, according to a regulatory filing.

The loss was not in line with the market consensus of a 71 billion won of operating profit, reported Xinhua.

“Sales of TVs, washing machines and refrigerators remained sluggish in the third quarter amid the economic downturn in advanced nations. Air conditioner sales dropped sharply due to low seasonality. Smartphone sales were projected to have decreased more than 20 percent on-quarter amid the absence of new models,” Soh Hyun-cheol, an analyst at Shinhan Investment Corp., said in a report before the earnings announcement.

LG Electronics has suffered from weak earnings for a long time due to late response to the smartphone boom and soft demand for TVs globally. The tech firm’s operating performance turned into the black in the first quarter this year after posting operating losses over the past two quarters. The second-quarter earnings remained in the black, but it turned into the red once again in the third quarter.

The global credit rating agency Standard & Poor’s downgraded Oct 14 the long-term corporate credit rating on LG Electronics by one notch to BBB-minus, citing operating underperformance in handset and display panel units. One day earlier, Moody’s revised down the outlook for the company’s Baa2 issuer rating to negative from stable.

Sales dropped 10.3 percent on-quarter to 12.9 trillion won in the three months ended Sep 30. Net loss reached 413.92 billion won during the July-September period compared with a 108.44 billion won of net profit three months earlier.