LG's operating profit plummets 91% in fourth quarter

The result missed by a wide margin an analyst consensus of 420.7 billion won compiled by FnGuide.

LG Electronics' wireless OLED M TV displayed at the CES 2023 in Las Vegas [NEWS1]

LG Electronics expects an operating profit of 65.5 billion won ($51.6 million) for the October-December period, down 91.2 percent on year, according to its earnings guidance released Friday.

The result missed by a wide margin an analyst consensus of 420.7 billion won compiled by FnGuide.

It is the first time in four years that the electronics maker posted a quarterly operating profit of less than 100 billion won.

This brings LG Electronics’ operating profit for all of 2022 to 3.55 trillion won, down 12.6 percent compared to 2021.

The steep fall in profit was due to soaring costs and weak electronics demand.

Quarterly sales were a record 21.86 trillion won, up 5.2 percent on year.

But that figure was also below a market expectation of 22.72 trillion won.

The previous quarterly sales record was 21.17 trillion won in the preceding quarter.

Annual sales estimates came to a record 83.47 trillion won, up 12.9 percent on year. That would be the first time the company’s sales surpassed 80 trillion won.

For the steep drop in profits, LG Electronics blamed a weak performance in home appliances and TVs caused by rising marketing costs and slow demand.

“The home appliance business saw a slight fall in sales due to slumping demand weighed down by worsening economic situations and rising competition in the overseas market,” said LG Electronics in a statement released Friday.

The TV and audio business is expected to post an operating loss for the third consecutive quarter. It posted an operating loss of 55.4 billion won in the third quarter.

“Premium TV sales shrank during the peak season due to slumping consumer sentiment affected by the continued geopolitical risks in the European region, amid falling TV demand worldwide,” said LG Electronics.

However, the automotive parts business helped support the bottom line.

“Auto part sales saw significant growth compared to the previous year thanks to the steady inflow of orders from carmakers and efficient supply chain management,” said LG Electronics.

LG Electronics’ vehicle component business swung into the black in the second quarter last year for the first time since 2016. No breakdown in earnings or an estimate for net profit were provided in the guidance.

LG Electronics will post its annual results on Jan. 27.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]