Business Technology

Sunday 25 March 2018

LG Electronics fourth quarter profit doubles on strong Black Friday TV sales

People pass by an oversize mock-up of an LG Electronics washer at the LG stand
People pass by an oversize mock-up of an LG Electronics washer at the LG stand

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 United States.

As the $120bn 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 totaled 238bn won ($220m) 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 117bn won of a year earlier and 218bn won of July-September.

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


The South Korean manufacturer said operating profit at its TV business reached 174bn 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 54pc 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 7pc from a year earlier.


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