South Korea’s LG Electronics Inc. slipped to red in its bottom line for the final quarter of 2016 due to sprawling cost of sustaining money-losing smartphone business.
The smartphone and home appliance maker on Friday reported an operating loss of 35.3 billion won ($29.8 million) for the fourth quarter ended December, disappointing the market consensus cited by FnGuide of 110 billion won in operating profit on sales of 14.2 trillion won.
Sales for the October-December reached 14.78 trillion won, up 11.8 percent from the previous quarter.
Shares of LG Electronics closed Friday at 52,600 won, down 1.87 percent or 1,000 won from the previous session. The data was released after the market closed.
The consumer electronics giant was able to earn around 500 billion won in the first two quarters in 2016 but it struggled from the latter half with profit halving to 280 billion won in the July-September quarter and then dipping into the negative territory in the subsequent quarter.
The bigger than expected losses are entirely blamed on its struggling smartphone business that has been making deficit from the second quarter of 2015. The mobile division posted an operating loss of 436.4 billion won despite its sales of 2.5 trillion won sales in the July-September quarter following the launch of G5 premium flagship. Its losses are estimated at mid 400 billion won level in the fourth quarter as its ambitious V20 premium phone also failed to impress consumers despite the exit of Samsung Electronics Galaxy Note7.
The home appliance division and TV businesses that made up for the losses from the mobile division in the first half gave ground. Marketing cost rose ahead of the Black Friday shopping season in the U.S. and sales also were stalled in the typically slow year-end season.
For full 2016, its operating profit reached 1.34 trillion won, up 12.2 percent from 2015, and sales down 2 percent on year at 55.37 trillion won.
By Lee Dong-in
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