EXCLUSIVE: LG OZ, Only Manages 1.5% Profit on $700M In Revenues
LG Electronics Australia has only managed to achieve a 1.5% profit on revenues of over $700M according to their latest financial results.
In 2017 the Company reported sales of $713M up from $695M in 2016, however profits eluded the Korean Company who is currently in a head on fight with the Australian Competition and Consumer Commission.
In 2017 LG Electronics Australia profits were $11.8M down from $11.9M they reported in 2016.
According to LG executives the Company has witnessed significant growth across their appliance business with their refrigerator business growing “significantly” during the past 12 months.
During the past year LG has been fighting a head on battle with Samsung in the TV market, this saw the two go head to head, LG with their OLED TV technology Vs Samsung with their QLED technology.
This led to LG increasing their marking spend from $8M in 2016 to $13.5M in 2017.
The Company also increased their promotion spend from $8.2M to $10M in 2017.
What’s not known is whether the promotion spend was an incentive to retailers or consumers.
A major concern for the Australian operation has been a lack of success in the smartphone market. Despite ranging models such as their G6 and V20 handsets which have been praised by reviewers around the world including this publication the Company has been unable to deliver volume sales.
Globally and despite weak sales of its latest smartphones, LG Electronics will report strong preliminary Q3 operating profits on the strength of its OLED TV and major appliances businesses.
Third-quarter profits soared 82.2 percent year over year to about US$450 million and sales climbed 15%. However, quarter-on-quarter numbers were weaker, with profits down 22.3 percent and sales up 4.6 percent.
While the company’s OLED strategy has been extremely effective, analysts expect LG’s smartphone business to ring up a loss of about $176 million in the quarter, during which chief rivals Apple and Samsung released new flagship phones.
LG stock also took a hit this week on the news that the U.S. International Trade Commission will impose penalties or quotas on Korean-made LG and Samsung washing machines in the USA, in response to an imports grievance brought by Whirlpool.
We are still awaiting a response from LG Australia.