LG Electronics has confirmed that they’re under pressure with the business confirming a net loss of A$792 million in the last quarter, this is despite the Company raking in billions selling data stripped from LG TV using WebOS , with their next revenue generator set to be subscriptions that consumers will have to pay for get new capability from LG appliances
The loss was worse than analysts’ expectations according to a FactSet-compiled consensus.
In the home appliances and TV division the South Korean Company did not break out revenues for Australia or even the Asia Pacific region, however management did admit that the Company was suffering from delayed recovery in global demand for home appliances.
As previously tipped by ChannelNews the business whose operation in Australia is struggling with management trying to reel in costs by sacking management who have worked at the Company for several years, is planning to launch new products with regional specialization and AI applications which could see Australians having to pay a subscription to get access to certain appliance features.
They are also planning to try and increase sales in what LG describe as ‘volume zone lineups’.
The Company has also flagged the introduction of subscription based products in markets such as Australia claiming that they plan to try and make money from AI home solution with management claiming in their latest financials that their ‘Subscriptions business will be actively expand beyond current markets, to include other regions, continuously creating new opportunities’ they said.
Last year appliance subscriptions surged by over 75 percent compared to the previous year, netting the Company A$2.22 billion Australian Dollars (AUD) in revenue.
Profits at the LG Home Entertainment Company and Business Solutions Company were also down despite an increase in revenue compared to the previous year, what’s known is how much of the revenue increase came from the sale of confidential customer data obtained using their expanded WebOS software built into them.
The data is being sold to third parties who then target LG customers with advertising. LG is also using the data to target customers as part of their plan to sell direct to LG customers who in the past have purchased goods at a high street retailer.
The Company claims that the fall in profits at their Home Entertainment Company was primarily due to external factors such as a delayed recovery in global demand for home appliances and increased logistics costs in the second half of the year.
Also coming into play was a change in direction with the Company now working to deliver new business models in Australia, which include home appliance subscriptions and Direct-to-Consumer sales.
Sales of OLED TVs saw growth in regions such as Europe and Asia but not in Asia Pacific Australia or the USA.
The Companies webOS-based advertising and content business generated $1.2 billion in annual revenues with most owners of an LG TV not realising that information on the TV shows they watch, which news services they favour are being sold to third parties including political parties.
The Company that is moving away from the consumer market and the sale of goods via retailers with management admitting that they are looking to expand sales of premium products such as OLED and QNED TV via their own web site.
The LG Media Entertainment Solution Company who has an operation in Australia is planning to integrate operations of LG’s screen-based businesses – including TVs, IT devices and information displays – to enhance synergies between hardware and platform businesses.
Additionally, webOS will be developed into an integrated content and services platform for both indoor and outdoor use through continuous content investment and partnership expansion.
The downbeat results highlight the continued challenges facing the South Korean company. LG Electronics’ television and home-appliance businesses have experienced a delayed recovery in overall demand, while its auto-component businesses suffered from a slowdown in electric-vehicle demand.
As a result of the Companies profit slump LG Electronics has taken steps to try and hold onto growth and become profitable by diversifying.
