LG Elec. Logs Fourth-Quarter Loss on Weak LCD, Phones

South Korean handset and appliance maker LG Electronics posted its first net loss in seven quarters, with numbers much worse than expected due to big shortfalls at its flat-screen affiliate and weak mobile phones.

Lee Jin-man / AP

LG also warned about a grim 2009 outlook, saying its sales should decline and profits worsen this year due to slumping demand and increasing competition.

The company said the global mobile phone market would shrink this year although it aimed to maintain sales growth from the business  and increase market share.

Analysts have predicted an 8 percent fall in the global market as the ongoing downturn saps demand, after growing consistently over recent years.

Handset makers are mired in a phase of margin-crushing competition, and LG will likely have to sell more lower-priced models to make up for sluggish sales in the high-end segment.

LG is expected to swing back to profit in the first quarter thanks to strong seasonal appliance sales, but the longer-term outlook remains gloomy on anaemic consumer demand.

An ambitious push in flat-screen televisions could also make it vulnerable to a fierce price war and eat away at profits, analysts say.

LG reported on Thursday a 671.3 billion won ($489.7 million) net loss for October-December, much worse than a consensus forecast of a 172.3 billion won net loss from eight analysts polled by Reuters.

The result compares with a net profit of 621.3 billion won a year ago and 24.9 billion won in the third quarter.

LG's global-basis sales were 13.37 trillion won, compared with a 12.93 trillion won forecast by analysts.

Following the results, LG shares closed 3.7 percent lower, against the wider market's 1.14 percent gain.

The world's fifth-largest mobile phone maker in July-September -- behind Nokia, Samsung Electronics, Sony Ericsson and Motorola -- sold 25.7 million phones in the fourth quarter, bringing total 2008 sales to 100.7 million units, meeting its target of 100 million.

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Last week, Sony Ericsson reported a bigger-than-expected quarterly pretax loss and said it would cut costs in light of weakening demand. Nokia is expected to announce sharply lower fourth-quarter numbers later on Thursday.

Worse-than-expected results last week at its LG Display flat-screen venture and currency-related losses also dented LG earnings.

LG shares dropped 31 percent in October-December, underperforming the benchmark KOSPI's 22 percent fall.

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