LG reports record Q4 loss, record drop in annual profit

Try as it may, 2010 is a year that LG Electronics will not soon forget. The struggling electronics giant on Wednesday reported its fourth quarter earnings and put the cap on its worst year on record. The company posted a fourth-quarter net loss of 256.4 trillion won compared to profits of 361.9 billion won in the fourth quarter of 2009. Operating profit for the full year was down 93% to 176.4 billion won. Revenue from cell phones dropped 15% as LGs mobile division posted a 274.1 billion won loss. Shipments were also down 10% to 30.6 million units, pushing LG into the No. 5 spot globally behind RIM. The company will look to new high-end smartphones like the Optimus 2X, Optimus Black and Optimus 3D as it attempts to reverse its declining mobile trend. LG remains the No. 2 TV company globally, as sales in its home entertainment division increased 15.8% compared to the third quarter of this year. Because competition forced LG to drop the average selling price on its television sets, however, the companys home entertainment business still posted an operating loss in the quarter.Hit the break for LGs full press release.

LG announces 2010 financial results

Quarterly Results Reflect Record-High Flat Panel TV Sales,Consistent Home Appliance Growth

SEOUL, Jan. 26, 2011 LG Electronics (LG) today announced full year 2010revenues of KRW 55.8 trillion (USD 48.2 billion) with net profit of KRW 1.3 trillion(USD 1.1 billion). Operating profit for full year 2010 was KRW 176.4 billion (USD152.5 million).

Unaudited results base! d on IFR S (International Financial Reporting Standards) for thethree-month period ending December 31, 2010 reflected strong revenues in homeentertainment and home appliances, driven by an increase in flat panel TV and handsetshipments, which partially offset soft performance for mobile phones during the quarter.

LG posted consolidated fourth-quarter 2010 revenues of KRW 14.7 trillion (USD 13.0billion) a 9.4 percent increase from the third quarter of 2010. LG recorded a KRW 256.4billion (USD 226.3 million) net loss in the fourth quarter of 2010. Overall operatingprofit fell but losses at the companys mobile division also declined and a reduction ininventory resulted in improved cash flow.

LG Home Entertainment Company sales increased 15.8 percent in KRW quarter-overquarterwith record-high quarterly flat panel TV sales due to strong seasonality andproduct leadership in developed markets. The company shipped 8.7 million flat panelTVs, reflecting a 33.0 percent increase from the same period the previous year. However,due to ASP decline as a result of intensified competition in the TV industry, earningsdeclined compared to the third quarter and posted an operating loss in this quarter.Annual sales reached KRW 22.1 trillion (USD 19.1 billion), jumping 12.5 percent fromthe previous year despite economic stagnation in developed markets.

LG Mobile Communications Company revenues increased 10.9 percent quarter-overquarterdue to strong sales of smartphones such as Optimus One. A total of 30.6 millionhandsets were shipped in the quarter, reflecting an 8.0 percent increase over the previousquarter. In 2011, the company will focus on profitability by launching more premiumsmartphones and differentiated tablet PC products while regaining its costcompetitiveness in feature phones

LG Home Appliance Company showed consistent strong performance with 13.7 percentgrowth year-over-year on sales of KRW 2.8 trillion (USD 2.5 billion) and an operatingprofit of KRW 78.0 billion (USD 68.8 million). Sales increased ! in the o verseas marketsdue to strong holiday season sales in the North American market and continuous growthin the emerging markets. Total sales for the full year rose 11.9 percent over 2009 toKRW 10.7 trillion (USD 9.2 billion), generating solid operating margin. The companyexpects to maintain its market leadership in refrigerators and washing machines whileexpanding its linear compressor and water treatment businesses.

LG Air Conditioning Company sales increased 50.5 percent year-over-year to KRW 0.9trillion (USD 0.8 billion) with significant growth in Middle East, Africa, Central andSouth America and stronger overseas commercial AC sales. Full year sales reachedKRW 4.8 trillion (USD 4.2 billion), 12.2 percent higher than a year earlier. In 2010, thecompany will continue to place considerable resources toward its nascent solar cell andLED lighting businesses while strengthening its competitiveness for strategic airconditioning products.

LG Business Solutions Company sales increased 1.9 percent quarter-over-quarter toKRW 1.2 trillion (USD 1.1 billion) despite a decline in market demand and a loweraverage selling price (ASP). Annual sales posted KRW 4.8 trillion (USD 4.2 billion),rising 4.3 percent from the previous year.

2011 1Q Business Direction and Prospects
With strong leadership under the new senior management, the company will focus onstrategic investment in product development and quality assurance for the long term. Toprepare for future growth, the company will continue to invest in high potentialbusinesses such as solar energy, commercial air conditioning and water treatment.

2010 4Q Exchange Rates Explained
Amounts in Korean Won (KRW) are translated into US Dollars (USD) at the averagerate of the three month period in each corresponding quarter: KRW 1,133 per USD(2010 4Q) and KRW 1,169 per USD (2009 4Q). Average rate of the twelve-monthperiod in 2010 was KRW 1,157 per USD and KRW 1,278 per USD in 2009. LG expectsthe exchange rate in 2011 to be KRW 1,100 per USD.

Ear! nings Co nference and Conference Call
LG Electronics will hold a Korean-language earnings news conference on October 26,2011 at 16:00 Korea Standard Time at the LG Twin Tower Auditorium (B1 East Tower,20 Yeouido-dong, Yeongdeungpo-gu, Seoul, Korea). An English-language conferencecall will follow on October 27, 2011 at 10:00 Korea Standard Time (02:00 GMT/UTC).Participants are asked to call +82 31 688 7001 and enter the passcode 50127. Thecorresponding presentation file will be available for download at the Investor Relationssection of the LG Electronics website (http://www.lg.com/global/ir/reports/earningrelease.jsp) at approximately 13:00 Korea Standard Time on October 26. Please visithttp://pin.teletogether.com/eng/ and pre-register with the passcode provided. For thoseunable to participate, an audio recording of the news conference will be available for aperiod of 30 days after the conclusion of the call. To access the recording, dial +82 26677 3358 and enter the passcode 026304 at the prompt.