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LG cites falling smartphone prices and higher marketing cost for Q4 loss

LG cites falling smartphone prices and higher marketing cost for Q4 loss

By Associated Press | Updated: 27 January 2014 14:09 IST

LG Electronics Inc. suffered a loss in the final quarter of 2013 because of the stronger South Korean currency while higher marketing costs and falling smartphone prices continued to batter its mobile business.

The South Korean tech company said Monday its net loss for October-December was 63.4 billion won ($58.5 million). That's far smaller than a 478.2 billion won loss a year earlier. But analysts polled by FactSet expected net income of 147.8 billion won. Sales for the fourth-quarter inched up 1 percent from a year earlier to 14.9 trillion won.

The maker of G flex smartphone said the quarterly loss, the first in four quarters, was mainly due to foreign exchange movements. The company blamed the strong local currency against the U.S. dollar and the Japanese yen as well as fluctuations in currency rates that usually mean higher costs.

Among LG's consumer electronics businesses, mobile was the only division that lost money during the fourth quarter.

Profit at LG's flagship TV business surged to 174.3 billion won from a mere 800 million won a year earlier. That was thanks to improved sales of LCD TVs in developed countries and efficient marketing spending to promote high-tier televisions, LG said.

But LG's mobile communications business lost 43.4 billion won, staying in red for a second quarter, despite higher sales from increased smartphone shipments. Shipments of its flagship G2 and other smartphones reached 13 million units in the quarter, a record high for the company.

LG attributed the mobile division's loss to increased spending on marketing and declining smartphone prices, an issue that nags other mobile phone vendors as growth in smartphone sales slows in developed countries.

For 2014, LG forecast a 7 percent gain in annual revenue and about a 20 percent increase in capital spending. The company said it budgeted 3 trillion won for capital expenditure for this year. The company's guidance for 2013 capital spending was 2.5 trillion won.

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