LG's Guidance Predicts First Quarterly Loss In 6 Years

LG Logo 2016 AH 1

LG Electronics will post the first quarterly operating loss in six years for Q4 2016, according to the company’s earnings guidance released on Friday. The South Korean tech giant is expecting a $29.36 million loss for the final quarter of 2016 after posting positive financial results for 23 consecutive quarters, starting in Q1 2011. The company’s representatives said LG’s global revenue likely amounted to approximately $12.4 billion during the final quarter of last year, which is a 1.5% increase in comparison to the previous period. The guidance came as a surprise to many industry analysts, most of whom were expecting LG to post a minor operating profit instead of a minor loss for Q4 2016. The Seoul-based tech giant didn’t reveal any further details in its latest guidance but confirmed that its official Q4 2016 financials will be released in late January.

Back in October, LG said it’s expecting diminished fourth-quarter profits due to a variety of reasons. Among other things, the company predicted weaker appliance sales which have been its strongest profit generator over the course of 2016 and was also expecting higher marketing expenses due to an increased level of competition during the holiday season. While LG’s recent financial statements were mostly ignoring the firm’s phone business, industry experts are now claiming that its struggling handset division is the main reason why the South Korean tech giant is expected to post an operating loss for the final quarter of 2016, Reuters reports.

LG’s phone business lost $389.4 million in Q3 2016 alone, a figure which would have likely been different had the company not downsized its struggling unit in August. Over the course of last year, LG released two flagship smartphones — the LG G5 and the LG V20 — but neither of them managed to achieve significant commercial success. The Seoul-based consumer electronics manufacturer is now hoping it can revive its phone division with the LG G6, a premium device that will likely ditch the modular design of its predecessor and reportedly be significantly cheaper to make than the LG G5. The company’s next flagship is expected to debut in late February at the Mobile World Congress in Barcelona. In the meantime, the tech giant will go public with its disappointing Q4 2016 financials.