[Concall Summary] LG Electronics "Expanding Sales with 5G Innovative Form Factors and Affordable Phones"

21 Consecutive Quarters of Losses... Operating Loss Reduced to 200 Billion KRW Range
"Innovative Form Factor Over $1000 & Mass Premium Launch"
"5G Budget Smartphones Using ODM to Launch in Korea and the US"

[Asia Economy Reporter Han Jinju] LG Electronics' smartphone business recorded a loss for the 21st consecutive quarter in Q2, but the deficit narrowed. LG Electronics aims to expand sales in the second half by offering innovative form factors and reasonably priced premium products to mid-to-low-end lineups in the 5G market.

On the 30th, LG Electronics announced that the MC Business Division posted sales of 1.3087 trillion KRW and an operating loss of 206.5 billion KRW in Q2. Operating losses decreased by 34% compared to Q2 last year, but sales also dropped by 18.88%.

Sales increased by 31.1% compared to Q1, thanks to higher smartphone sales in key regions such as North America and Korea. LG Electronics consecutively launched the mass premium phones 'Velvet' and 'V60', as well as mid-to-low-end Q and K series domestically and internationally. Despite the impact of COVID-19, sales increased from the previous quarter due to the effect of new product launches, and operating losses decreased thanks to reduced marketing expenses and the effect of relocating production facilities.

LG Electronics stated, "Although demand in the smartphone market is partially recovering, sales competition is expected to intensify. We will increase overseas launches of the strategic smartphone 'LG Velvet' and expand sales of affordable new models to create momentum for sales growth and continue to pursue profit improvement."

Quarterly Sales of LG Electronics MC Business Division

The Q3 smartphone market is expected to see intensified competition as Samsung, Apple, and others plan to launch new 5G flagship products. LG Electronics is preparing the new form factor 'LG Wing (tentative name)' and reasonably priced premium products. They plan to respond to the market with products segmented by price range, from innovative form factor devices to mass premium new products and mid-to-low-end products.

Seo Dong-myeong, Head of Planning and Management at the MC Business Division, said, "Among the 5G smartphone lineup, products priced over $1,000 will feature LG's differentiated form factor to enhance brand image, and we will expand sales volume with premium products that focus on trendy design and meaningful specs for consumers at reasonable prices."

Considering the market trend where the 5G smartphone market is expanding with affordable products, LG Electronics plans to target advanced markets with its 5G affordable lineup. To recover profitability, they will also expand the proportion of ODM production and improve business structure simultaneously.

Seo explained, "Apple's launch of 5G products is expected to be a catalyst for growing the 5G market. Since quality testing and function stabilization are essential to provide stable 5G service, we will strengthen strategic and technical partnerships with chipset companies and expand sales mainly in advanced 5G markets where Chinese companies find it difficult to enter."

He added, "Recently, new affordable models developed by ODM have enhanced design and usability, strengthened specs such as large screens and multi-cameras from the customer's perspective, and are receiving a good response in the U.S. market. In the second half, we will launch 5G affordable products using ODM in Korea, the U.S., and other markets to proactively target 5G customers and expand sales."

The MC Business Division is focusing on lowering production costs to break free from the entrenched deficit structure. Seo said, "We are continuously working on structural improvements such as expanding ODM production and streamlining development processes to strengthen business competitiveness and improve profitability, and some improvements in the profit structure are appearing. We plan to pursue profitability recovery through sales expansion and are making efforts to improve the structure through business turnaround, so please watch with a long-term perspective."

This content was produced with the assistance of AI translation services.