LG Electronics fourth-quarter profit below forecast on weak TV income
By Se Young Lee
SEOUL (Reuters) - South Korea's LG Electronics Inc <066570.KS> reported a weaker-than-expected profit for the fourth quarter, weighed by weak television earnings stemming from higher price competition and adverse exchange rate effects in markets like Brazil and Russia.
For the full year, the world's No. 2 TV maker behind compatriot Samsung Electronics Co Ltd <005930.KS> almost doubled operating profit due to strong demand for high-end TVs and a series of record smartphone shipments.
Profit is likely to grow further in 2015 as demand for premium TVs in particular is seen picking up further, analysts say. The smartphone division has also turned a corner with the mid-2014 launch of flagship G3, they say.
In detailed October-December earnings released on Thursday, LG said operating profit rose 28 percent from a year earlier to 275 billion won (166 million pounds). That was slightly below the 299 billion won average forecast of 35 analysts polled by Thomson Reuters I/B/E/S.
Profit for the TV division dropped in the quarter to 1.7 billion won from 153 billion won a year earlier, marking the weakest level in two years. The business had recorded a combined 507.3 billion won profit from the previous three quarters.
The company said intensifying price competition and the weakness of emerging market currencies like the Russian rouble and the Brazilian real weighed on TV earnings.
The mobile business returned to black with a 67.4 billion won profit after shipping 15.6 million smartphones, compared with a record 16.8 million devices shipped in the third quarter. The electronics maker did not launch any flagship mobile devices in October-December, which analysts say likely hurt sales.
Analysts are optimistic about LG's prospects for 2015, primarily because of demand for high-end TVs. A Thomson Reuters I/B/E/S survey of 41 analysts tips full-year operating profit to rise about 10 percent to 2 trillion won.
Researcher DisplaySearch forecasts shipments of ultra high-definition (UHD) liquid crystal display (LCD) TVs to more than double this year, compared with 7.2 percent growth tipped for the broader market for LCD sets.
Shares of LG were down 1.9 percent as of 0549 GMT after the detailed fourth-quarter release, which followed full-year figures on Wednesday. That compared with a 0.4 percent decline in the benchmark index <.KS11>.
(Editing by Christopher Cushing)
