The good news keep on piling for LG over the past couple of weeks. Not only has the company’s latest flagship, the G3, been well received by tech publications worldwide and is selling like hot cakes in its South Korean home turf, but it has also helped LG Electronics Inc.’s shares rise and now analysts are predicting that the company’s handset business will turn to profit in Q2 2014, for the first time in four quarters.
LG Electronics Inc.’s shares had closed at 70300 won ($69.14) on May 27th, the day prior to the G3’s launch in South Korea, but were up to 78600 won ($77.31) today at closing time, recording an 11.8% increase in the span of 10 trading days. The company’s shares are now at an all-time 52-week high, and should be rising even further following the global launch of the LG G3 toward the end of the month as well as the estimated profitability of LG’s handset business. Two different analysts have recently predicted LG’s mobile division turning profit in Q2 2014, for the first time in a year. Both Soh Hyun-chul from Shinhan Investment & Securities Co. and Lee Seung-hyuk from Korea Investment & Securities Co., think the G3’s success will get this division out of a string of losses, the former with an operating profit estimate of 11 billion won ($10.8 million) and the latter at 20.6 billion won ($20.2 million). Regardless of which estimate turns out to be true, the numbers are quite a turnaround from last year’s Q3, when the division posted an operating profit loss of 80 billion won ($78.6 million), and the following Q4 2013 and Q1 2014 quarters where it was still in the red. With Q2 2014 signalling a changing tide for LG, Q3 should prove even more profitable, with the G3 slated to launch globally, and most importantly in China, in July. Soh Hyun-chul expects the G3 sales to reach 13 million units thanks to its timely arrival in China, right when the Galaxy S5’s excitement is falling and before the iPhone 6’s release. Compared to the G2’s 6.5 million units, the G3 is hence expected to sell double and boost the company’s total 2014 sales over 50 million units. While all these numbers are great indicators of LG’s mobile push finally coming to fruition, they pale in comparison to Samsung mobile’s gargantuan operating profits of over 6 trillion won (more than $6 billion) per quarter. LG has a long way to go to reach those levels, but it can at least rest assured that it is on the right path.
