LG Electronics Inc. has announced financial results for Q4 2013, posting a loss in the mobile division.
On Monday, January 27, LG posted its financial results for the quarter ended December 31, 2013, and announced a net loss of 63.5 billion Korean Won (approximately $60 million). The company blamed the stronger Won against the U.S. dollar and higher marketing costs of mobile handsets for the loss incurred in the quarter.
LG is not the only company that has struggled as a result of fluctuation in foreign exchange. The financial results of Samsung Electronics and Hyundai Motors were also affected due to a stronger Korean Won that has emerged as one of the top performing Asian currency against the U.S. dollar.
The net loss posted by LG in Q4 2013 was less that the 478.2 billion Won loss in the same quarter of 2012. Analysts estimated the South Korean company would post net income of 147.8 billion Won. Sales for the fourth quarter inched up 1 percent from 2012 to 14.9 trillion Won.
LG launched its flagship smartphone, the G2, in August 2013 and released the device in mid-September 2013. The G2 is a top-end smartphone and is meant to compete with other high-end handsets offered by other companies. LG's mobile business also ranked third by global shipments just after Samsung and Apple.
"The LG Mobile Communications Company reported a 29 percent increase in annual revenues to KRW 12.97 trillion (USD 11.85 billion) year-on-year and an 18 percent increase in fourth-quarter revenues to 3.59 trillion (USD 3.38 billion) quarter-on-quarter with help from stronger LTE smartphone sales such as G2 and Nexus 5. Smartphone shipments of 13.2 million units represented an increase of 54 percent from the previous year," per LG.
However, the company also suggested that the "intensified price competition" and "higher marketing investments" resulted in a loss to the mobile division during Q4 2013.
This is the second time in a row that LG's mobile division is posting a loss despite higher sales from global shipments. LG said its mobile shipments increased to a record 13 million units during Q4 2013. Among LG's consumer electronics businesses, its mobile division was the only one that reported a loss during the fourth quarter.
The company also reported that its flagship TV business increased to 174.3 billion Won from 800 million Won a year earlier. LG said that improved sales of LCD TVs in developed countries and efficient marketing spending to promote high tier televisions helped it achieve such a result.
LG said it forecasts a 7 percent gain in annual revenue and about a 20 percent increase in capital spending in 2014.
