[Edaily Reporter Yun Junghoon ]LG HelloVision(037560)LG HelloVision’s second-quarter earnings this year deteriorated significantly due to a combination of the scaling back of its educational smart device distribution program and sluggish performance in its pay-TV and mobile virtual network operator (MVNO) businesses. Profitability fell sharply as VOD revenue declined amid a market realignment centered on OTT services, compounded by intensifying price competition in the MVNO market. The company plans to lay the groundwork for a recovery in profitability in the second half of the year through structural reforms and ongoing operational efficiency improvements.

LG HelloVision announced on the 6th that its operating revenue for the second quarter of this year, based on consolidated financial statements, was 243.3 billion won, a 31.3% decrease compared to the same period last year. Operating profit for the same period fell 71.7% to 3.0 billion won, while net income dropped 84.1% to 1.1 billion won. The operating profit margin fell from 3.0% last year to 1.2%.

The decline in performance was primarily driven by a shrinking market for the distribution of smart devices for educational use, as well as a decrease in VOD revenue resulting from the restructuring of the media landscape centered on Over-the-Top (OTT) services. Additionally, a decline in overall revenue and operating profit was unavoidable as the company pursued measures to streamline its business structure.

By business segment, the core broadcasting business recorded revenue of 119.8 billion won, a 2.7% decrease compared to the same period last year. While the decline in VOD usage due to the expansion of the OTT market continued to have an impact, the company is taking measures to retain subscribers, such as launching the “Monthly Subscription Exclusive Channel,” a genre-specific VOD streaming service.

Revenue in the Internet segment stood at 33.5 billion won, down 2.5% year-over-year, while the Mobile Virtual Network Operator (MVNO) segment recorded 36.8 billion won, a 9.9% decrease, due to intensifying competition over low-cost rate plans in the mobile communications market. The MVNO segment plans to continue expanding customer choice by launching diverse partnership rate plans, such as bundles combining insurance and coupon packs.

The rental and location-based business segments also saw a slowdown in performance. Revenue in the rental segment fell 31.7% year-over-year to 30.8 billion won due to intensifying competition in the home appliance market during the peak season. The location-based business, which includes media and B2B operations, posted revenue of 21.9 billion won—a 55.5% year-over-year decline—as the company adjusted its business portfolio.

Despite the decline in revenue, efforts to cut costs helped reduce operating expenses by 30.1% year-over-year to 240.3 billion won, partially offsetting the deterioration in profitability.

Financial soundness indicators showed a more stable trend. As of the second quarter, the debt-to-equity ratio stood at 171.9%, down 7.7 percentage points year-over-year, and net debt totaled 397.2 billion won—a decrease of 39.6 billion won year-over-year—due to reduced borrowing and an increase in cash and cash equivalents.