The turnaround of LG Electronics’ troubled mobile division hinges on its ability to sell mid-to-premium-tier 5G handsets and further cost cuts, the company warned as it posted further declines for the unit in Q4 2019.
In its financial results, the manufacturer blamed sluggish sales of mass-market handsets overseas and increased expenses for continued declines in the division.
It noted its Mobile Communications unit suffered from increased marketing costs associated with product launches, lower sales and expenses to support “year-end channel inventory clearance” in the quarter.
Mobile unit sales dropped 21 per cent year-on-year to KRW1.32 trillion ($1.1 billion). Its operating loss was KRW332 billion compared with KRW319 billion in Q4 2018.
In its 2020 outlook the company said it expected “severe competition from offensive pricing policy” in the market and increased demand for 5G devices.
It added the business would “preoccupy 5G market demand by launching of mass-premium and mass-tier 5G products” and “try to improve cost competitiveness and increase sales driven by securing key spec comparativeness and proactively utilising ODMs in mass-tier products”.
As predicted in its preliminary Q4 results LG Electronics, which includes a range of business lines, booked a jump in operating profit, but net income plummeted on declines from its outside investments.
It took a loss of KRW849.8 billion compared with a loss of KRW80.7 billion in the same period of 2018.
In its statement, the company pointed to demand for home appliances for boosting its top-line in the period, though its figures were hit by the mobile unit declines and a slowdown in vehicle component sales.