SEOUL (Reuters) - South Korea’s LG Electronics Inc, the world’s No.2 TV maker, swung to a profit in the fourth quarter as its latest smartphone model helped its ailing handset unit post a small profit after six consecutive quarterly losses.
LG reported on Wednesday an October-December operating profit of 23 billion won ($20.5 million), versus a consensus forecast of 64 billion won profit by Thomson Reuters I/B/E/S.
That compared with a loss of 246 billion won a year ago and a 32 billion won loss in the preceding quarter.
LG’s handset business posted 9.9 billion won in operating profit, marking a sharp improvement from a 262 billion won loss a year ago and a 140 billion won loss in the third quarter.
“It’s quite encouraging that LG’s handset business has finally turned around,” said Greg Noh, an analyst at HMC Securities. “The profit figure is very small, but earnings will improve going forward as its massive restructuring is finally having some bottom-line impact and its Optimus LTE model is selling well. However, it’ll be hard to imagine a stellar turnaround.”
The turnaround was helped by solid sales of its Optimus LTE model, which runs on Google’s Android platform and is LG’s most popular smartphone with 1 million sold since its October debut.
The firm said handset shipments dropped to 17.7 million in the fourth quarter from 21.1 million in the preceding quarter, as it reduced less profitable feature phones.
Its weak results underscore the growing dominance of Apple and Samsung Electronics Co, which has roiled traditional handset stalwarts such as Nokia, Motorola Mobility and HTC Corp.
Apple and Samsung together control nearly half of the global smartphone market, according to industry data.
LG trails Nokia and Samsung in handsets and competes with Samsung, Sony Corp and Panasonic Corp in flat-screen TVs.
LG’s mobile business has been its biggest capital sinkhole, losing nearly $1 billion since the second quarter of 2010 and the company announced a near $1 billion cash call late last year, mainly to prop up its floundering handset division.
LG said it aimed to raise 2012 sales by 6 percent to 57.6 trillion won.
Shares in LG rose 2 percent after the result versus a 0.3 percent decline in the broader market.
LG shares have gained 13 percent over the past three months, beating a 2 percent rise in the wider market.
Its TV business returned to a profit of 150 billion won, helped by strong sales during the year-end holiday period in the crucial U.S. market.
TV makers are grappling with weak consumer demand and cut-throat competition and hope that premium products with slimmer designs, powerful chipsets and crisp displays will revive growth this year after a flat 2011.
Sony warned in November of a fourth consecutive year of net losses for the financial year to end-March, with its TV unit alone set to lose $2.2 billion on falling demand and a surging yen.
LG, one of few profitable TV makers, plans to raise TV sales by up to 17 percent to 35 million this year and is betting on premium models such as 3D sets and Internet-enabled TVs boost profitability.
LG’s TV division posted a 2.4 percent profit margin.
($1 = 1123.3500 Korean won)
Reporting by Miyoung Kim; Editing by Matt Driskill and Jonathan Hopfner