The operating loss of LG Electronics’ smartphone business has increased every quarter. Overshadowing the effect of its relocation of its South Korean operations to Vietnam. As marketing costs for 5G smartphones also increase, the pace of business structure improvement seems to slow down.
LG Electronics Mobile Communications business headquarters posted an operating loss of $279 million in the fourth quarter of last year. During the same period, its sales stood $11 billion.
Although it has been challenging North American markets with ‘G8X ThinkQ’ reportedly its sales volume was not very good either. Accordingly, cost-cutting efforts through ODM have also not resulted in meaningful improvement in business structure. As a result, LG Electronics’ smartphone business continued to suffer losses for 19 consecutive quarters until the fourth quarter of last year.
Sales of low-end smartphones also declined on-year in North America, its main market. The U.S. market is the largest overseas market for LG Electronics.
Not only its Mobile Communication, LG reports increasing loss on other aspects in 2019 Q4
LG Electronics explained that it is consistently pushing to improve its business structure through streamlining global production sites, strategies for platform and modularization, and cost reduction.
LG Electronics’ consolidated-based operating profit reached $85.6 million in the fourth quarter, up 34.5 percent from a year earlier. The figure is slightly higher than the $82.9 million disclosed in the announcement of the provisional performance.
Considering that the fourth quarter of last year was the worst period for LG Electronics in two years. However, some analysts say that the rise in profitability is due to the “mistake effect.”
During the period, operating profit of H&A (Home Appliance & Air Solution) Business Headquarters and HE (Home Entertainment) Business Headquarters were $12.2 billion and $110 billion respectively. The HE Business Headquarters, which is in charge of TVs, saw its operating profit drop from a year earlier due to increased marketing costs due to increased competition in the global TV market.
In addition, it has achieved $53.5 million in operating loss and $55.8 million in operating profit for Business Solution (BS) Business Headquarters.
