LG Electronics misses forecasts as TV profits tumble
By Miyoung Kim
SEOUL (Reuters) - LG Electronics Inc fell short of consensus forecasts in quarterly earnings on Wednesday, with profits in its TV division tumbling to around one tenth of year-earlier levels as the world's No.2 TV maker bumped up promotional spending in the year-end holiday season.
LG is set to face a challenging year with forecasts from research firm DisplaySearch calling for flat global TV sales on economic uncertainty and as many households in developed economies already own a flat-screen TV.
Currency rates also look unfavorable. The won has strengthened, reducing the value of earnings made abroad while weakness in the yen has boosted the price competitiveness of Japanese rivals.
LG's October-December operating profit came in at 107 billion won ($98.84 million), up 25 percent from a year earlier but below a consensus forecast for 151 billion won by 32 analysts surveyed by Thomson Reuters I/B/E/S.
The result was broadly in line with a 116 billion won profit forecast by Thomson Reuters StarMine's SmartEstimate, which places more emphasis on timely projections from the most accurate analysts.
It was the first time LG reported under new South Korean accounting rules, resulting in changes to year-earlier figures.
LG said the profit margin at its TV business declined for a second straight quarter to 0.3 percent from 0.8 percent in the previous quarter and 5.7 percent in the second quarter. The increase in marketing costs coincided with greater price competitiveness from Japanese rivals who have benefited from weakness in the yen.
Shares in LG have been almost flat over the past three months, underperforming a 3 percent gain in the wider market. Prior to the results, its shares rose 0.7 percent, in line with a 0.5 percent rise for the broader market. Continued...