Smarthphones put LG back on track

By Kim Yoo-chul

LG Electronics bounced back last year with its operating profit jumping over 25 percent in the fourth quarter on the back of strong smartphone and television sales.

The firm’s operating profit for 2012 nearly tripled to 1.13 trillion won.

On Wednesday, the company reported operating profit of 107 billion won between October and December, up 25.2 percent from a year before. However, revenue fell by 2.3 percent to 13.5 trillion won in that period.

The company made 50.96 trillion won in revenue last year, a decline of 6 percent from the previous year.

Its home entertainment division, which includes its television unit, reported 6.44 trillion won in revenue for the last quarter. Its handset-making division saw 2.81 trillion won in revenue for the October-December period.

Fourth-quarter profit for the home entertainment unit was 19 billion won and that of the handset division, 56 billion won.

LG said its TV business fared well despite increased marketing costs amid heated competition between rivals.

LG has announced its fourth quarter earnings based on a consolidated basis, an international accounting measurement that includes all LG’s overseas performances.

However, the firm’s net loss widened in the fourth quarter due to increased marketing costs and a fine for being part of a price-rigging cartel. Net loss came to 467.8 billion won for the fourth quarter, compared with a deficit of 111.6 billion won a year earlier.

In December, the European regulator fined LG Electronics and five other firms, including Panasonic and Philips, a total of 1.47 billion euros ($1.98 billion), for fixing the prices of now-obsolete cathode ray tubes between 1996 and 2006.

On a positive note, LG’s handset business is back on track and has been in positive territory since 2010.

LG was late to introduce smartphones and since 2010, LG has been an underdog in the global market, dominated by Samsung and Apple.

``For last year, our handset business reported 58.6 billion won in operating profit as out better product mix-up paid off,’’ said a company spokesman. For the fourth quarter alone, it reported 56.3 billion won in profit after it sold 8.6 million smartphones, a quarterly record.

To continue its growth momentum, LG has given employees special bonuses of 50 percent to 200 percent of their basic salary, depending on their performance.

``We hope to pay more bonuses to our employees this year as such an incentive will motivate them to do their best amid cut-throat competition,’’ said an official from LG’s mobile division.

This year, LG is looking to to push its advanced OLED TVs and the company stressed it will roll out more smartphone variants that support LTE.

It has set a revenue goal of 53.5 trillion won for 2013 and plans to invest 2.5 trillion won in facilities.