LG Q4 2019 losses widens on equity ties, sluggish smartphone sales

LG Electronics has reported revenues of 16.06 trillion won (US$ 13.65 billion) for the fourth quarter that ended December 31, 2019, which is up 2.3% compared to the same quarter last year. It posted profits of 101.8 billion won (US$ 86.5 million), up 26.1% YoY, while net profit was down 953% YoY to 849.8 billion won (US$ 717 billion). This is due to losses in its equity ties with LG display, in which it has 37.9% stake and sluggish smartphone sales. LG Display is said to post more than 1 trillion won in losses in 2019, according to analysts, and we should know the exact figures when it posts the results on Friday.

For the whole 2019 it posted revenues of 62.3 trillion won (US$ 53.0 billion) in 2019, reflecting strong demand for premium home appliances such as LG SIGNATURE and high-growth, category-creating products. It posted full-year operating profits of 2.44 trillion won (US$ 2.07 billion), down 10% compared to 2018 due to increased investments in marketing and future technologies.

Mobile Communications sector reported a quarterly revenue of 1.32 trillion won (US$ 1.12 billion), down 13.15% QoQ and down 21.4 % YoY due to sluggish sales of mass-tier smartphones in North America. Operating loss was 332.2 billion won (US$ 279.4 million), extending a slump to 19 consecutive quarterly losses. This is higher compared to loss of 318.5 billion won a year ago. Mobile sector posted a full-year operating loss of 1.01 trillion won (US$ 858.34 million), compared to 778.2 billion in 2018 due to increased marketing expenses to support flagship devices.

Profitability was down due to increased marketing expenses by new product launching, sales decline and increased expenses to support year-end channel inventory clearance.

LG expects there will be increase in demand for premium products in developed markets with growth of 5G demand and launching of various new form factors. It anticipates severe competition in mass-tier products from offensive pricing policy. It plans to preoccupy 5G market demand by launching of mass-premium and mass-tier 5G products and will try to improve cost competitiveness and increase sales driven by securing key spec comparativeness and proactively utilizing ODMs in mass-tier products.


Author: Srivatsan Sridhar

Srivatsan Sridhar is a Mobile Technology Enthusiast who is passionate about Mobile phones and Mobile apps. He uses the phones he reviews as his main phone. You can follow him on Twitter and Instagram