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I was extremely surprised to see LG's profit margin being as low as 1.2c per device. That would be a poor profit margin for a chocolate bar, let alone a smartphone. That is obviously not sustainable.

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Margins in consumer electronics are typically razor thin, particularly when the device in question is a commodity (mid-tier Android phones, for example).

1.2c is obviously unsustainable, as you mention. I wonder if they got blindsided by a price increase on some part.

How can these be razor thin and 1.2c when a trip to the local shops and the internet shows variations in the 10€ range for the same models ?

Because the price the store charges you is not the price the manufacturer charges the store.

It costs LG $10, they sell it to Best-WalGet for $10.012. the price range you see is depending on how much it gets marked up for retail.

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