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LG Sees Sharp Drop in Q4 Profit, Analysts Point to Thinning TV Margins

LG Sees Sharp Drop in Q4 Profit, Analysts Point to Thinning TV Margins

By Reuters | Updated: 8 January 2019 14:28 IST

South Korea's LG Electronics said on Tuesday its fourth-quarter operating profit likely plummeted 80 percent from the same period a year earlier, falling well below analyst expectations.

The world's second-biggest television set maker behind compatriot Samsung Electronics Co estimated profit of KRW 75.3 billion ($67.03 million) for October-December last year. That would compare with the KRW 387 billion average of 11 analyst estimates in an I/B/E/S Refinitiv poll.

Revenue likely fell 7 percent to KRW 15.8 trillion, LG said in a regulatory filing, versus analysts' KRW 16.3 trillion estimate.

LG did not disclose further details of fourth-quarter operations and will announce full results at the end of January.

Analysts said likely causes included profit margins for its high-end TVs being thinned by increasing competition, while the firm's smartphone business continues to lose money.

"It's a surprise," said analyst Lee Jae-yun at Yuanta Securities. "Home appliance sales were worse in emerging markets and China, while its high-end TV business isn't making profit as much as before."

Analysts also said earnings were likely squeezed by higher year-end bonuses and marketing expenses for new handsets.

LG held a 3 percent share of the global smartphone market in the second quarter of last year, showed latest data from market tracker Counterpoint Research.

Earlier in the day, Samsung estimated a 29 percent drop in quarterly profit, its first decline in two years, as it flagged tough memory chip and mobile phone markets.

© Thomson Reuters 2019

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