LG Electronics Lets Go of Smartphones... MC Business Division Reports 280 Billion KRW Operating Loss in 1Q

Operating Losses to Be Recorded from Q2
Final Business Closure Scheduled for End of July

The LG Twin Towers in Yeouido, Seoul, where LG Electronics' headquarters is located, on the 2nd, as LG Electronics' exit from the smartphone business is imminent. Photo by Mun Honam munonam@

[Asia Economy Reporter Cha Min-young] LG Electronics Mobile Communications (MC) Division, which is set to withdraw from the smartphone business in July, recorded an operating loss of 280 billion KRW in the first quarter. The scale of the operating loss also increased compared to the previous year.

LG Electronics MC Division announced on the 29th that it posted sales of 998.7 billion KRW and an operating loss of 280.1 billion KRW in the first quarter. Sales were similar to the same period last year, but the operating loss widened compared to the previous year.

An LG Electronics official explained, "Sales were similar to last year, but intensified competition in the global market led to an increase in operating losses." The price decline caused by sales focused on older models also had an impact.

From the second quarter, the MC Division's performance will no longer be reflected in operating profit but will be accounted for as discontinued operations loss. LG Electronics plans to completely cease all business activities by the end of July and is currently implementing workforce reallocation, tangible and intangible asset liquidation, compensation for business partners and suppliers, and customer after-sales service (A/S) measures.

Meanwhile, based on overall company performance, LG Electronics achieved record-high sales and operating profit in the first quarter. Consolidated sales for Q1 2021 amounted to 18.8095 trillion KRW, and operating profit was 1.5166 trillion KRW. The operating profit margin was the highest ever for a first quarter at 8.1%.

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