Operating loss at LG Electronics’ mobile division soared during Q4 2016, as the unit’s performance was hampered by weak sales of its G5 smartphone and high marketing costs.
LG shipped 14.1 million devices in the recent quarter and recorded an operating loss of KRW467 billion ($400.3 million) – far higher than the KRW60.9 billion loss recorded in Q4 2015. While the number of devices sold in Q4 2016 represents an eight per cent decline year-on-year, the comparison is not like-for-like because LG transferred some products from the mobile division into other areas of the business during the opening three months of 2016.
In its earnings statement, the South Korean manufacturer admitted sluggish sales of the G5 impacted its mobile unit’s figures in Q4 2016, but highlighted strong sales of its new V20 handset and sales growth in North America as positives for investors.
The unit generated sales of KRW2.90 trillion in Q4 2016, down 21 per cent year-on-year.
In its 2017 outlook, LG said it expected new devices due for launch after MWC to “greatly improve the company’s market position”. It also anticipates: “Innovation competition among new premium products and price competition in mass-tier zone will be intensified. Also the consumer’s sensitiveness on quality and stability of the smartphone is expected to rise continuously”.
LG saw its overall net loss for the fourth quarter grow from KRW140.5 billion in 2015 to KRW258.80 billion in Q4 2016, as sales grew marginally from KRW14.5 trillion to KRW14.7 trillion.