LG posts narrower loss, sold 60 million handsets last year

by: Robert TriggsJanuary 26, 2016


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 performanceIn 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.

LG's major releases last year:

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.

  • saksham

    fuck chinese OEMs

    • SoHot!

      LG is a South Korean company, NOT CHINESE. Serve them right for selling LG G4 with a known manufacturing issue!

      • Svnjay

        The touchscreen or bootloader issue?

        • SoHot!

          Boot loop issue.

      • saksham

        i meant that the chinese companies are taking over the smartphone division and people are attracted towards them

  • jerry

    is there any transfer pricing in these profit/loss figures for mobile companies?

    For example, just guessing here, but maybe “LG mobile division” pays the “LG home entertainment” division for its phone screens,
    so while it’s an expense for LG mobile division to purchase the screens, it’s a revenue for LG home entertainment for selling the screens.

    • Hans Pedersen

      You mean, do they count expenses when doing budget stuff? I’m pretty sure they do. :D

      • jerry

        No you muppet, the division that makes the screens for the phones might be making profits from selling those same screens to another division within LG that inserts those screens into the phone. Now, while no money has left LG, on the books of the division making the screens it shows a healthy profit, while the books of the mobile division could show a loss.
        This is similar to inter-company transfer pricing from subsidiaries in low tax country to parent company in high tax country. Maybe just maybe, transfer pricing is what is going on here.

        • Hans Pedersen

          So, they’re doing what they’re obliged to do by any standard finance law. reporting budgets on assets, expenses and income? This is how finance works. You can’t make something out of nothing.

  • Karly Johnston

    I thought they made money last year.