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LG posts narrower loss, sold 60 million handsets last year

LG saw its net loss shrink in Q4 2015, but the company’s smartphone division continues to lose cash, despite a boost from its V10 flagship.
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Published onJanuary 26, 2016

LG-1

LG has announced its financial results for the fourth quarter and the full year for 2015 and it’s a bit of a mixed set of result, as seems to have be the theme for big electronics corporations last year. LG managed to reduce its net loss, but the company’s smartphone division continues to haemorrhage cash.

LG mobile division performance
In total, LG’s net loss came to 140.4 billion won ($117 million) for the fourth quarter, compared with 205.6 billion won in Q4 2014. The company saw its operating profit plunge by 34.8 percent for the full year down to 1.19 trillion won, while sales fell by just 4.3 percent. LG most profitable business sectors were its home entertainment, appliance and vehicle component divisions, which posted profits of 3.7 trillion, 214.8 billion, and 9.7 billion won respectively. Unfortunately, the company’s mobile division is not as healthy.

Looking at mobile in more detail, sales came in at 3.7 trillion won for Q4, pretty much flat at a 0.4 percent decline year-on-year. This resulted in an operating loss from the unit worth 43.8 billion won, but this is a marked improvement over Q3’s operating loss of 77.6 billion won. However, last year LG’s mobile division was on the cusp of breaking even, pointing to some major setbacks this year.

This short term boost comes as sales grew 12 percent quarter on quarter, as North American consumers rushed to pick up LG’s latest flagship V10 smartphone. The V10 is certainly a top of the line device, but the extra engineering expenditure has not turned into profit. In total, LG sold 15.3 million units between October and December, with 10.8 million of those containing fast 4G LTE modems. Overall sales reached 59.7 million units for the year, up ever so slightly from 59.1 million the year before. LG doesn’t appear to be able to escape the push for lower prices that is occurring across much of the industry.

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LG is expecting a tougher year ahead, especially in the budget smartphone segment. LG is banking on new and improved low end models and additional promotion for its flagship handsets to boost sales over the next twelve months. The company indicates that two flagships are on the way this year, the upcoming G5 and likely a successor to the V10 later in the year, but declined to give details about either of them.

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