LG posts flat Q2 revenue as flagship shipments fall short

Analysts have been gradually reducing their profit and smartphone shipment forecasts ahead of today’s official figures announced by LG. While not as bad as rivals HTCand Sony, LG has also fallen short of expectations so far this year.

Year on year and quarterly shipments have remained virtually unchanged. LG shipped 14.1 million phones in Q2, down from 15.4 million in Q1 and 15.5 million in Q4 2014. However, this includes the launch of its latest flagship G4 smartphone, so Q2 was expected to see a jump in sales.

Overall, the company generated sales worth KRW 3.65 trillion ($3.33 billion), just a one percent increase compared with Q2 2014. This comes in a year when LG had planned to sell over 70 million smartphones. Total company revenue fell by 7.6 percent year on year, suggesting that smartphones are outperforming some of the giant’s other business arms.

The problem mostly seems to be associated with a lack of demand in the high-end market. No doubt due to the increasing competition from lower cost Chinese manufacturers. LG called the quarter “challenging”, but expects to recover lost ground in the third quarter. On the plus side, LG has seen revenue from North America improve by 36 percent YoY, thanks to strong sales from mid-range phones and tablets.

LG actually managed to sell a record 8.1 million LTE capable smartphones in Q2. Overall, the company’s quarterly sales were only down by 3 percent compared with the same time last year, suggesting that mid-range sales have helped to offset the lack of demand for premium smartphones.

LG states that it will continue to pursue both the high and mid-range markets going forward, and that the company will be paying particular attention to emerging markets. Perhaps LG’s second flagship this year can turn its high-end fortunes around too.