Q2 operating profit likely to be at 2-year high, says LG Electronics

South Korea’s Lucky Goldstar (LG) Electronics Inc said on Friday its second quarter operating profit likely reached a two-year high, with analysts pointing to strong contributions from its mainstay home appliances and television set businesses.

The world’s second-biggest television (TV) maker by market share, behind compatriot Samsung Electronics Co Ltd, said in a regulatory filing that April-June profit was likely 585 billion won ($505.6 million), compared with the 599 billion won ($517.7 million) average of 23 analyst estimates in a Thomson Reuters I/B/E/S survey.

The result would be the highest quarterly profit since the 610 billion won ($527.2 million) of the second quarter of 2014. LG Electronics did not offer any additional details ahead of final results scheduled for late July.

Analysts said ahead of the Friday disclosure that the firm likely saw strong profit from its appliances business due to sales of premium products and unusually warm weather in certain markets that boosted demand for air conditioners.

They also said the TV division likely swung to profit as major sporting events such as the 2016 UEFA (Union of European Football Associations) European Championship soccer tournament boosted demand for large-sized sets. Weak display panel prices also likely helped boost margins, they said.

Some analysts were sceptical about LG Electronics’ prospects during the second half of the year, however, as the appliances business enters a seasonally weaker period.

They also said sales of its G5 smartphones have been disappointing and that the mobile division likely reported a fifth consecutive operating loss in April-June.

“Despite the G5’s originality, LG sold only 2.2 million units of the strategic model due to stiff competition,” HMC Investment analyst Greg Roh said in a report on Thursday, estimating the mobile division booked a loss of 94 billion won ($81.2 million).

“We expect the mobile division to remain in the red in 3Q16,” Roh said.

LG Electronics also on Friday said revenue for the second quarter likely rose 0.5 per cent to 14 trillion won ($12.1 billion), versus 14.4 trillion ($12.4 billion) won tipped in the Thomson Reuters I/B/E/S poll.