LG posts $224 million loss as ‘weak’ selling G5 smartphone drags it down once again

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Samsung just recorded its best quarter of business for three years, but the same can’t be said of fellow Korean electronics firm LG. LG just carded a KRW 258.80 billion ($223.98 million) net loss for Q4 2016 — its first company-wide loss for six years — on account of another poor performance from its mobile division, as revenue fell by nearly one-quarter over the past year.

LG recorded positive revenues of KRW 14.78 trillion ($12.79 billion) for the period, up 11.7 percent on the previous quarter and 1.5 percent year-on-year, but the Q4 2016 loss is a step back from the 348.9 billion won profit that it recorded in Q4 2015.

The company primarily blamed its mobile business, along with its auto components unit, for dragging its figures down. LG Mobile Communications — the segment that manages its smartphone business — pulled in KRW 2.90 trillion ($2.51 billion) in revenue in the fourth quarter of 2016, a 15 percent increase on the previous quarter but a 23 percent drop year-on-year.

The company went with a bold modular approach for its flagship smartphone in 2016, the G5, and it bombed.

“Profitability was hampered by weak sales of the G5 smartphone and higher marketing investments,” LG said in a statement.

LG sold 55 million smartphones in 2016 — it didn’t explicitly state that in its press release but the figures for sales in Q4 where in its full financial report. That figure is down on 59.7 million in 2015 and 59.1 million in 2014.

LG did add that it had seen “strong sales” of its V20 device, which was launched in October and features dual cameras.

Poor sales dragged the company’s financial reports down in Q2 and Q3, so it’s hardly a surprise to see that its upcoming replacement — the G6 — is abandoning that approach in favor of more mainstream effort. Judging from a leaked image of the device, gathered by The Verge this week, the G6 looks like being one to watch with its near-bezel-less design, unique 2:1 aspect ratio and other stylings.

The device is set to launch at Mobile World Congress, the mobile industry’s annual shindig in Barcelona, next month. Bonus for LG: Samsung won’t debut its Galaxy S8 at the show, so LG has a better shot at dominating the limelight and potentially reversing what has been a poor twelve months for its mobile business.

On the automotive side, LG is working with Chevy on its upcoming electric car. While that business saw revenue jump 64 percent year-on-year to reach KRW 865.7 billion ($749.2 million), the firm said that its investments in R&D caused it to realize a KRW 14.5 billion ($12.5 million) loss in Q4. LG did say, though, that it expects its work with Chevy and that increased research investment will pay off in 2017 and beyond.

LG didn’t have a good 2016 but it expects to see “high-single digit” year-on-year revenue growth and “significant” quarter-on-growth increases in profit in 2017.

01/25 04:25 PST: Post updated with LG’s smartphones sales for 2016