LG Electronics reported an increased loss at its mobile unit in the fourth quarter of 2018, as sales fell despite the launch of new premium products.
The company increased its marketing spend to support the launch of its new products during the peak season and reduced its channel inventories. While it said its business structure had improved through better material cost controls and overhead efficiencies based on its platform modularisation strategy, this was not enough to offset the sales slowdown.
Its Mobile Communications operating loss of KRW322.3 billion ($289.8 million) compared with a KRW216.3 billion loss in Q4 2017, on revenue of KRW1.71 trillion, down from KRW2.92 trillion.
For the full year, operating loss of KRW790.1 billion was up from KRW736.8 billion, on sales of KRW7.98 trillion, down from KRW11.16 trillion.
Looking forward, LG said its mobile business will “push 5G products and smartphones featuring different form factors while focusing on key markets where the LG brand remains strong”. It cited “operator-driven markets such as North America and [South] Korea” as a focus for stable sales.
But it also cautioned smartphone demand will continue to fall and price competition will intensify.
The mobile weakness dragged on the company as a whole in Q4 2018, with revenue of KRW15.77 trillion down 7 per cent year-on-year. Net loss of KRW80.7 billion compared with a profit of KRW182.8 billion in Q4 2017.
Its Home Entertainment unit also suffered from a sales slump in the recent quarter (down 6 per cent to KRW4.56 trillion). It intends to focus on premium OLED TVs and large-screen ultra-HD TVs for both revenue and operating profit growth.Subscribe to our daily newsletter