LG Electronics flags 80% plunge in Q4 operating profit; analysts blame thinning TV margins

LG Electronics' fourth-quarter operating profit fell well below analyst expectations.
LG Electronics' fourth-quarter operating profit fell well below analyst expectations.PHOTO: REUTERS

SEOUL (REUTERS) - South Korea's LG Electronics said on Tuesday (Jan 8) its fourth-quarter operating profit likely plummeted 80 per cent from the same period a year earlier, falling well below analyst expectations.

The world's second-biggest television set maker behind compatriot Samsung Electronics estimated profit of 75.3 billion won (S$88.8 million) for October-December last year. That would compare with the 387 billion won average of 11 analyst estimates in an I/B/E/S Refinitiv poll.

Revenue likely fell 7 per cent to 15.8 trillion won, LG said in a regulatory filing, versus analysts' 16.3 trillion won 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 per cent 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 per cent drop in quarterly profit, its first decline in two years, as it flagged tough memory chip and mobile phone markets.