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Business News/ Companies / LG Electronics Q4 profit doubles on strong Black Friday TV sales
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LG Electronics Q4 profit doubles on strong Black Friday TV sales

LG posts $220 million operating profit in October-December quarter; sells 13.2 million smartphones in Q4, up 54%

Shares in LG Electronics dropped 1% after the earnings announcement, versus a 1.2% fall in the wider market. The stock dropped 6% over the past six months, lagging a 1.5% gain in the KOSPI. Photo: AFP Premium
Shares in LG Electronics dropped 1% after the earnings announcement, versus a 1.2% fall in the wider market. The stock dropped 6% over the past six months, lagging a 1.5% gain in the KOSPI. Photo: AFP

Seoul: LG Electronics Inc. beat analyst estimates by doubling its fourth-quarter profit as heavy promotional activity lifted TV sales during the post-Thanksgiving holiday shopping kickoff known as Black Friday in the US.

As the $120 billion TV industry has peaked, the world’s No.2 television manufacturer is now aggressively pushing to increase sales of high-end TV sets that boast curved and crispy screens with price tags of $7,000 to protect margins.

But earnings are set to be squeezed again this year as TV demand growth stagnates in the lucrative markets of advanced economies.

A slow recovery in its handset business will also continue to weigh on earnings growth, overshadowing a widely expected margin recovery at its bread-and-butter home appliances operation as it plans to launch new fridges and washers.

Operating profit totalled 238 billion won ($220 million) in October-December, the world’s second-biggest TV maker after Samsung Electronics Co. Ltd said in a statement on Monday.

That compared with the 223 billion won estimate of 35 analysts polled by Thomson Reuters I/B/E/S, as well as the 117 billion won of a year earlier and 218 billion won of July-September.

Shares in LG Electronics dropped 1% after the earnings announcement, versus a 1.2% fall in the wider market. The stock dropped 6% over the past six months, lagging a 1.5% gain in the KOSPI.

Marketing spend

The South Korean manufacturer said operating profit at its TV business reached 174 billion won from just 80 million won a year prior.

Its mobile business, ranked No.3 by shipments after Samsung and Apple Inc., swung to an operating loss of 43 billion won from profit of 56 billion won a year earlier, as the company spent more on marketing flagship products such as its G2 and G Pro smartphones.

The mobile loss came even after smartphone shipments grew to a record 13.2 million units, up 54% year on year.

“The positive impact of improved product mix was offset by higher marketing investments to strengthen LG’s brand equity and intensified price competition," the company said in a statement.

LG plans to unveil the latest version of its large-screen G Pro smartphone next month, a segment widely expected to become more popular as Apple also works to introduce iPhones with larger screens later this year.

LG said on Monday it was targeting 62.3 trillion won in 2014 sales, up 7% from a year earlier. Reuters

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Published: 27 Jan 2014, 11:42 AM IST
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