LG looks to restore mobile profit - Mobile World Live

LG looks to restore mobile profit

26 JAN 2016

LG Electronics said it will release two premium smartphones per year, as it looks to return its mobile unit to profitability after a loss in 2015.

In the fourth quarter of 2015, it reported an operating loss for the unit of KRW43.8 billion ($36.46 million), compared with a prior-year profit of KRW68.1 billion, on revenue of KRW3.78 trillion, down 0.4 per cent from KRW3.79 trillion.

Coupled with a Q3 loss (but after a profitable first half), the company saw a loss in the mobile business for the full year of KRW48.3 billion, compared with a 2014 profit of KRW316.1 billion, on revenue of KRW14.4 trillion, down from KRW15.1 trillion.

Smartphone shipments
The company shipped 15.3 million units during the lucrative period, which includes the Christmas holiday sales season, down 2 per cent year-on-year.

While it did not provide year-on-year comparisons, LG said that shipments in North America improved 13 per cent quarter-on-quarter with stronger premium smartphone sales. However, sales in its home market declined 10 per cent, due to “continuous weaker demand”.

For the twelve months, smartphone shipments of 59.7 million marked a “slight increase” on 59.1 million in 2014.

And, as usual, the company warned that the competition is getting stronger, thanks to “new premium model launches by competitors as well as continuous price competition in the mass segment”.

On a group level, the company reported a Q4 net loss of KRW140.5 billion, compared with a prior-year loss of KRW205.7 billion, on revenue of KRW14.56 trillion, down from KRW15.27 trillion. For the full year, the profit of KRW249.1 billion was halved from KRW501.4 billion in 2014, on revenue of KRW56.51 trillion, down from KRW59.04 trillion.

It attributed the slowdown in Q4 sales to “competitive conditions and currency impacts”, while 2015 as a whole was described as “a generally challenging year”. For the full year, it cited “sluggish global market demand for TVs and softer growth of the smartphone market”.

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Steve Costello

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