LG Elec earns near $3 bn 2020, to keep key mobile tech for "internalization"

Lee Ha-yeon 2021. 1. 29. 10:39
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(Updated with conference call comments, additional data)

LG Electronics Inc. reigned as the most profitable white goods maker in the world with income nearing $3 billion in its best-ever year of 2020 and suggested to keep premium mobile business for “internalization” as it is pivotal to drive home and vehicle connectivity.

“Our key mobile technology is not just important for smartphones, but also for smart home appliances and vehicle electronics. We are devoted to research to stay ahead of global trends,” said Seo Dong-myung, the MC division chief, in a conference call Friday where questions mostly centered on the future of the mobile division after the company earlier confirmed it was studying various options for the mobile division that has incurred losses of nearly $5 billion over the last six years.

He said various ways to “internalize” its mobile technology is being studied to bring about greater synergy with future businesses and saved further words on speculation of discussions to sell the low to mid-tier smartphone businesses.

Separately in a regulatory filing on Friday, LG Electronics said its consolidated operating profit reached 650.2 billion won ($581.2 million) in the quarter ended December, down 32.2 percent from a quarter ago but up a whopping 538.7 percent from a year earlier.

It earned a net profit of 262.3 billion won, plunging 59.6 percent from three months ago but reversing from a loss of 849.8 billion won against the previous year. Sales jumped 11 percent on quarter and 16.9 percent on year to record 18.78 trillion won.

For full 2020, the company’s operating profit soared 31.1 percent on year to 3.19 trillion won, exceeding 3 trillion won for the first time since inception. Net income jumped more than 11-fold to 2.06 trillion won, while sales added 1.15 percent on year to total 63.26 trillion won.

Profit and sales all beat their previous record figures, in line with analysts’ consensus of 3.19 trillion won in earnings and 63.26 trillion won in revenue.

Earlier on Thursday, the company in its disclosure said it will pay out a yearly cash dividend of 1,200 won per a common share and 1,250 won for a preferred share to reward its shareholders a total of 216.9 billion won and 21.5 billion won, respectively. The payouts expanded by 60 percent and 56.3 percent from a year earlier.

LG Electronics shares closed Friday 6.99 percent lower at 153,000 won.

Home appliances business posted its stellar year.

[Photo by Yonhap]
The home appliances & air solution (H&A) division raked in 5.54 trillion won in revenue in the fourth quarter, up 20 percent from the previous year. Sales at home and overseas all reported double-digit growth and profit also was improved thanks to cost-reducing efforts. Yearly operating profit reached 2.35 trillion won on sales of 22.27 trillion won, both record figures.

The home entertainment (HE) division, which sell TVs, also delivered improved sales of 4.28 trillion won, gaining 7.9 percent on year thanks to brisk sales in North America and Europe.

“The company will focus on premium OLED TV models to continue the revenue growth and stable profitability,” said Lee Jeong-hee, vice president of the HE division at LG Electronics, projecting a modest growth in demand in the first half of this year in a conference call after the earnings release.

The mobile communications (MC) business reported a 5 percent on-year gain in revenue in the final quarter. It reduced fixed costs but profit decreased due to slow sales of premium models. It caused a loss of 841.2 billion won for full 2020.

The vehicle component solutions (VS) division, another loss-making division, generated 1.91 trillion won in sales after adding 41.3 percent on year, and the business solutions (BS) division posted 1.51 trillion won in revenue, up 4.8 percent.

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