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LG Electronics' net loss narrows in Q4

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Published : 2016-01-26 16:37
Updated : 2016-01-28 11:36

South Korean tech giant LG Electronics Inc. said Tuesday its net loss narrowed in the fourth quarter from a year earlier on strong sales of premium TVs and home appliances, despite a poor performance from its smartphone business.

Net loss came to 140.4 billion won ($117 million) in the October-December period, compared with a deficit of 205.6 billion won during the same period in 2014, LG Electronics said in a regulatory filing.


Sales shed 4.7 percent on-year to 14.5 trillion won, and operating profit advanced 26.8 percent to 348.9 billion won.

For all of 2015, LG Electronics' net income reached 249.1 billion won, down 50.3 percent from the previous year. Sales edged down 4.3 percent to 56.5 trillion won, while its operating profit plunged 34.8 percent to 1.19 trillion won.

The net profit for 2015 hovered far below the market's earlier estimate. Local brokerage houses expected a net profit of 525.4 billion won, according to data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency.  

The operating profit, however, came in line with the estimate of 1.19 trillion won. The fourth-quarter operating profit also met the earlier estimate of 340 billion won.

By sector, the home entertainment business posted an operating profit of 109.2 billion won in the fourth quarter, rising sharply from 2.1 billion won posted a year earlier on the back of the improved sales of high-end models.

The mobile business posted an operating loss of 43.8 billion won, continuing to post weak returns amid the heightened competition. The segment posted an operating loss of 77.6 billion won in the third quarter of 2015.

The mobile business posted sales of 3.7 trillion won, down 0.4 percent on-year. The figure, however, managed to climb 12 percent on-quarter on the back of improved sales in the North American market, led by the V10 smartphone. 

Over the October-December period, LG sold 15.3 million units of smartphones, with high-end long-term evolution (LTE) models accounting for 10.8 million units, the largest amount since 2010, when LG first tapped the smartphone industry.

It marked the first time for the quarterly sales of LTE-powered smartphones to hover above the 10-million mark. For all of 2015, the combined shipment of LTE-powered smartphones jumped 55 percent on-year to 34.5 million units.

LG sold 59.7 million units of smartphones last year, rising slightly from 59.1 million units posted in 2014.

The home appliances and air solution division posted an operating profit of 214.8 billion won, doubling from 92.2 billion won posted a year earlier on the back of the improved sales of premium products.

The vehicle component business posted an operating profit of 9.7 billion won, marking the first time it boasted a quarterly profit.

The company, however, said it will take two or three more years for the vehicle component business to post steady profits.

For 2016, LG Electronics said it expects the market demand for premium TVs, including Ultra HD TVs, will continue to rise, so it will continue to improve profitability by focusing on its high-end products like organic light-emitting diode TVs.

The company added the tech industry will experience tougher competition in the budget smartphone segment, adding it will make efforts to roll out various low-end models with improved design to take a larger slice of the market. It also plans to beef up the promotion of flagship products as well, including the V10 released last year.

LG also said earlier this month it will showcase its next flagship smartphone, presumably the G5, just before the Mobile World Congress in Barcelona this February, taking on Samsung Electronics Co.'s Galaxy S7, which is also likely to debut there.

While LG declined to comment on details of the new flagship model, the company said the production cost is expected to increase in line with improved features, but it will try to maintain the price from its predecessor by cutting costs in other areas.

Concerning the home appliances business, LG said the arm is set to post steady growth, although the political unrest in the Middle East and the slowing Chinese economy will remain potential risks.

LG added it will promote high-end built-in brands to bolster the segment's profitability.

Shares of LG Electronics closed at 54,800 won, down 3.52 percent from the previous session, when the benchmark KOSPI lost 1.15 percent. The fourth-quarter result was released after the market closed. (Yonhap)