14 DAY TRIAL // LG posted its financial results for the last quarter of 2016 and the full year, and the figures aren’t at all encouraging for the Korean company. LG announced a 2016 operating profit of $1.16 billion, which means a 12.2% increase compared to 2015.
The main reason LG was able to record an operating profit increase is the strong sales of home appliances, air solutions, and home entertainment divisions. LG recorded revenues of $47.92 billion in 2016 and a net income of $109.31 million.
During Q4 2016, LG recorded a $223.98 million net loss, mainly due to the company’s mobile division. Revenue rose in Q4 2016 by 11.7% to $12.79 billion, partly due to sales of its recently announced LG V20.
LG is counting on the G6 to improve its market position
Still, revenue only grew 1.5% compared to the same quarter of last year. Back in Q4 2015, LG recorded a $299.4 million profit, which means that the company has really taken a step back in the past year. This is also LG’s first quarterly loss in 6 years and it can be attributed to poor sales of the LG G5.
The company’s flagship was expected to drive sales up in the past year, but it managed to do quite the contrary. The semi-modular design of the G5 failed to impress the market and LG seems to have taken that into account.
The upcoming G6 won’t feature modular accessories and will bring significant improvements to the previous flagship. LG’s mobile division was strongly affected by low G5 sales and recorded 23% lower revenue in Q4 2016, compared to Q4 2015. However, the company didn't release mobile sales numbers.
“Profitability was hampered by weak sales of the G5 smartphone and higher marketing investments,” said the press release posted by LG. Nonetheless, the company is hopeful about the upcoming G6, which will be announced during the Mobile World Congress in Barcelona next month. LG will also announce new mass-tier devices in the second quarter in order to improve the company’s market position in 2017.