South Korea's LG Electronics Inc beat analyst estimates by doubling quarterly profit thanks to year-end holiday spending on high-end TVs, brushing off a loss in its smartphone business.
The world's second-biggest TV maker after Samsung Electronics Co Ltd has been promoting its most profitable sets in advanced economies where consumers are more willing to pay higher prices, but where sales growth has stagnated.
The manufacturer has also spent heavily marketing high-end smartphones in its quest to catch up with leaders Samsung and Apple Inc, which in the fourth quarter was at the expense of profitability.
LG, which also makes microwaves and vacuum cleaners, hopes the spending will lead to overall revenue of 62.3 trillion won ($57.67 billion) this year, 7 percent more than last year.
That would come after October-December operating profit reached 238 billion won, LG said in a statement on Monday, beating the 223 billion won estimate of 35 analysts polled by Thomson Reuters I/B/E/S.
The figure also compared with the 218 billion won of July-September and 117 billion won of a year earlier, when marketing and supply chain management problems affected profit at its TV unit.
"Even as the global TV market shrank in the last quarter, we were able to achieve higher profit thanks to increased sales of high-end models in North America and Europe," Chief Financial Officer Jung Do-hyun said at an earnings briefing.
"We plan to boost profit further this year by expanding premium line-ups, but risks remain due largely to growing volatility in emerging-market currencies, which was one of the major factors hitting our bottom line last year."
LG, which last year launched TVs with curved next-generation technology displays, said operating profit at its TV business reached 174 billion won from just 800 million won a year prior.
LG is hoping a shift toward premium models will help it cope with a slowdown in global TV sales, and increase its competitiveness against Japanese rival Sony Corp whose products were made cheaper in some economies by a weak yen.
TVs generated 40 percent of revenue in the fourth quarter. Mobile devices accounted for 24 percent and home appliances 19 percent. The remainder came from its air conditioning unit and other operations.
LG, whose G2 and G Pro smartphones challenge Samsung's Galaxy line and Apple's iPhones, shipped a record 13.2 million smartphones in the fourth quarter, up 54 percent on year.
Even so, its mobile business swung to an operating loss of 43 billion won from profit of 56 billion won.
"We substantially increased mobile marketing in the third and fourth quarter and the amount hit a record level last quarter. We'll continue to invest heavily on marketing, as we don't think it will take just one year to strengthen our brand equity," Yoon Bu-hyun, vice president of the mobile business, said at the briefing.
CFO Jung said he expects the marketing investment to show results from the second half of this year.
Next month, LG plans to release the latest version of its high-end G Pro large-screen smartphone, a segment where competition is set to peak if Apple enters later this year, as widely expected.
