LG Electronics operating profit up 28 pct

By Bahk Eun-ji

LG Electronics said Thursday that its operating profit rose 28 percent to 2.7 billion won in the fourth quarter on the strong performance of its mobile phone business.

Its sales came in at 15.3 trillion won, up 5 percent year-on-year.

The fourth-quarter earnings report came a day after LG Electronics released its annual earnings numbers in compliance with a local rule that requires large firms to disclose results if there's a change in profit or sales by 15 percent or more.

The nation’s leading consumer electronics maker posted 1.8 billion won in operating profit last year, up 46 percent from a year earlier, the largest increase in five years boosted by the strong performance of its flagship G series smartphones.

It posted a net loss of 205 billion won mainly due to the write-off costs resulting from the closure of the company’s plasma TV operations.

“Overall profit structure in our smartphone business division got better last year by focusing on the mid-tier segment,” it said in a statement.

LG said it will pay a 400 won year-end dividend, up from 200 won the previous year.

The company’s mobile communications division reported a 16 percent increase to 15 trillion won in annual revenue, thanks to help from North America, where shipments increased 78 percent during the fourth quarter.

LG sold 59.1 million smartphones in 2014, 24 percent up from a year earlier. It expects a challenging year ahead with greater global competition from various manufacturers, so the company said it will concentrate on improving its brand power and focusing on selective key markets.

The company’s home appliance division reported 2.88 trillion won in fourth quarter revenue, up slightly from the same period the previous year. It saw stronger sales in Europe and emerging markets such as the Middle East and Africa.

Analysts were not positive about the result due to higher-than-expected TV price competition.

“In particular, during the Black Friday shopping period in November, which is the peak season for TVs, LG’s TV sales were hurt by competitors’ aggressive price promotions,” said Kim Hae-yong, a tech analysts at NH Investment & Securities.

Kiwoom Securities’ tech analyst Kim Ji-san said however, LG’s earnings will show steady growth this year on the back of improvements for the smartphone business. Kim said it left little reason to expect a further downslide, as the stock remains undervalued.

Share prices of LG Electronics closed down 1.4 percent at 62,600 won on the nation's main bourse.