After loss, LG sees lower profit, currency risks

Published on NewsOK Modified: January 27, 2014 at 2:50 am •  Published: January 27, 2014
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SEOUL, South Korea (AP) — LG Electronics Inc. is forecasting lower earnings from its mobile business this quarter and risks from swings in Latin American currencies after posting an unexpected loss in the final three months of 2013.

The latest results from LG Electronics, the world's second-largest TV maker and a major device supplier, underline how it is being squeezed between Japanese competitors and its bigger South Korean rival Samsung Electronics Co.

LG is battling Japanese manufacturers such as Sony and Panasonic that are expanding market share in televisions, helped by the weak yen. The company is struggling to make money from the smartphone market where Samsung and Apple Inc. have grabbed the lion share of the profits.

LG Electronics suffered a loss in the final quarter of 2013 because of the stronger South Korean currency while higher marketing costs and falling smartphone prices continued to batter its mobile business.

The South Korean tech company said Monday its net loss for October-December was 63.4 billion won ($58.5 million). That's far smaller than a 478.2 billion won loss a year earlier. But analysts polled by FactSet expected net income of 147.8 billion won. Sales for the fourth-quarter inched up 1 percent from a year earlier to 14.9 trillion won.

The maker of G flex smartphone said the quarterly loss, the first in four quarters, was mainly due to foreign exchange movements. The company blamed the strong local currency against the U.S. dollar and the Japanese yen as well as fluctuations in currency rates that usually mean higher costs. LG manufactures most of its home appliance products in South Korea and ships overseas.

Chief Financial Officer Jung Do-hyun said unstable currency movements in Latin America and other emerging markets would remain a big risk. About 20 percent of LG's mobile phone sales came from Brazil and other South American countries last year. Argentina's peso lost 16 percent over two days last week.