Losses continue piling up for LG ElectronicsLG Electronics said Thursday its fourth-quarter deficit has widened on the heels of losses in its equity ties with a display-making affiliate, while its mobile business remained in the red.
The tech giant said it logged a net loss of 849.8 billion won ($717 million) in the October-December period, compared with an 80.7 billion won net loss a year earlier.
The company’s operating profit increased 34.5 percent on year to 101.8 billion won in the fourth quarter, but this was an 87 percent drop compared to the previous quarter. Sales rose 1.8 percent on year to 16 trillion won.
For the whole of 2019, LG Electronics’ net income tumbled 87.8 percent on year to 179.9 billion won. Operating profit dropped 9.9 percent on year to 2.4 trillion won, but sales inched up 1.6 percent on year to a record 62.3 trillion won.
LG Electronics said its equity ties with LG Display hurt its bottom line. The company holds a 37.9 percent stake in the world’s leading OLED panel maker.
LG Display, which is scheduled to announce its fourth-quarter earnings on Friday, has been suffering from falling LCD panel prices. Analysts here expect LG Display to suffer more than 1 trillion won in losses in 2019.
LG Electronics’ mobile business extended a slump to 19 consecutive quarterly losses.
The mobile business unit posted 332.2 billion won in operating loss in the fourth quarter, widening from a 318.5 billion won loss a year earlier.
For all of 2019, its mobile business had sales of 5.9 trillion won, down from 7.9 trillion won in 2018, while operating loss was tallied at 1.01 trillion won, also widening from 789 billion won in 2018.
Analysts here predict that LG Electronics shipped only 29 million smartphones in 2019, down 28 percent from a year earlier.
“Sluggish sales of mass-tier smartphones in overseas markets, increased marketing expenses and retail inventory adjustments led to operating loss in the mobile business,” the company said.
LG Electronics’ vehicle component solutions business also suffered.
In the fourth quarter, that unit logged an operating loss of 63.7 billion won, sharply widening from a loss of 27.4 billion won reported a year earlier due to slower global automobile sales. Sales at the business unit also dipped 3.1 percent on year to 1.3 trillion won.
The company’s home entertainment business unit, which manages TV products, logged 4.59 trillion won in sales during the fourth quarter, relatively unchanged from a year earlier, but operating profit was nearly halved to 110 billion won over the cited period due to increased marketing costs.
LG Electronics’ home appliance and air solution business division, however, posted solid results.
The home appliance unit had its best ever fourth-quarter sales at 4.62 trillion won, up 7 percent from a year earlier, while its operating income jumped 8.5 percent on year to 122.2 billion won.
Shares in LG Electronics closed unchanged at 67,200 won on the Seoul bourse. The earnings results were released before the market closed.